CFA Society Boston Mock Exam

Hey guys,

I went through the mock exam answers and couldn’t figure out a few:

Morning Exam #38

For underlying earnings per share would you not add back the restructuring and real estate charge costs? I can’t figure out why they are subtracted.

Morning Exam #26

Isn’t the sale of the new equipment 10 Million, not 10.5? I can’t figure out where that came from

Appreciate any feedback

I encountered both, and both are errors.

Is this the provider with the lion head symbol?


I noticed an other error relating to the rate used to translate long term debt.

How did you score?

I got 62% in AM and 77% in PM. Quite the spread! What about you?

I did 80% on AM and 85% on PM. The PM was definitely easier.

Another error:

Morning exam #42, should use the beginning period book value of equity, no?

I see your point. Could it be appropriate since the cost of equity was derived using year-end data?

I was wondering the same thing when I was calculating the answer. I think it should be beginning BV of Equity. In my opinion it doesn’t make any sense to calculate RI from ending BV of equity…

How can this mock exam have so many errors, especially considering how much it costs… I don’t think they even published a note on their website to correct it.

Question #13 in the PM section (FRA)

They’re asking for net interest expense. The company reports using U.S GAAP.

Net Interest Expense : Beginning Funded Status X Discount Rate = 4,982$ X 6% = 294. This is wrong in my opinion.

Doesn’t U.S GAAP use the different rates to calculate interest expense, in this case 6% = discount rate amd 7% expected return?

Question #27 in the PM section (Corporate Finance)

40% corporate tax rate

30% personal income tax on dividends

0.5 Dividend payout ratio

Effective tax on Company’s pretax income distributed as dividends?

–> I got 58% but the answer sheet has 55% as the correct answer. They somehow incorporated the payout ratio into the calculations but isn’t the payout ratio irrelevant from the investors’ point of view?

most important how the taxes are calculated double taxation or imputation? I think dividends payout ratio matters otherwise how would you determine the portion of income that will be taxable under individuals rate?

US GAAP interest expense is the beginning obligations * DR then you add the expected return

IFRS uses the net beginning obligations (minus assets) *DR

Where do you see that company is reporting using U.S GAAP for this question #13? They are asking for ‘Net interest expense’ and that’s only something they would ask under IFRS (it would be ‘Interest cost’ under U.S GAAP). ‘Net Interest expense’ under IFRS is Beginning Funded Status x Discount rate, which is $294.

I am more struggling with the next one (#14), where they ask for remeasurement under IFRS. I thought remeasurement was calculated using the difference between expected and actual return on plan assets (7% x 31,508 - 1,932 = $273.5) and Actuarial gains/losses (-$86), so in total: $273.5 - $86 = $187.5.

Answer A is -$187.5 (so I may have signs issue here) but I don’t see how they are getting -$44.5 (Answer C). Did you figure this one out?

Never mind, i think I found the answer:

Wondering the same, don’t think this is right…

You’re right. I didn’t think about that. I assumed that they were using U.S GAAP as the first sentence in the vignette states that they’re a US company. But as net interest expense is an IFRS concept, I think you have to assume IFRS in question #13

I think I found another mistake: question #32 PM (Equity Valuation):

In the answer sheet’s calculation WCinv is added when it’s supposed to be subtracted. I checked this by calculating FCFE starting from CFO (includes WCInv) and got 1491 as the FCFE. ( the answer sheet states 1600 as the correct FCFE)

Sorry to hear that. Honestly, It’s 100 percent inexcusable for 3rd party or CFAI to have “Mistakes” in their mocks OR practice questions. It’s hard enough to score well without the added BS and lack of attention to detail on their part.