# Do we need to present formula. morning session

in one of the cases: historic economic data was given (TFP, Growth in Capital stocks, growth in labor, elasticity of capital).

question asks: Using the data and log form of CDPF, determine the estimated percentage change in output.

quideline answer states: formula: %deltaY=%deltaTFP + alpha*(%deltaK)+(1-alpha)*(%deltaL). then calculations follow.

points: 4 max. 3 for correct folmula, 1 for correct calculation

My question:

in order to save time, I skiped writing formula itself. Instead, I have written figures directrly (ie %deltaY=2%+ 0.75*1.75%+(1-0.75)*0.5%. And ultimately arrived at correct answer.

Does that mean that I will be awarded only 1 point out of 4?

AFAIK, CFA Institute gives partial credit. So writing formula makes sense, even if you don’t give the correct answer or make a mistake with numbers.

And if you’re expected to show the calculations right, formula is essential. I would interpret a question asking to show calculations to grade the formula.

By correct formula they mean how you write out the equation. You can use numbers rather than symbols, so you would get 4/4.

Grading these morning exams is difficult, but I read through the CFA guidelines and it looks like they take any reaosnable answer into account. They’re not looking to screw you on things like this (not writing algebraic formula) they’re looking to screw you on little details like real vs nominal.

different people, different strokes

I have always been taught - show the grader what you are doing.

so write the formula, plug the numbers into the formula, calculate, write answer, write units for answer

that gives you more chance of a partial credit

write numbers directly (Without showing what you are doing) and then get a wrong answer because you calculated wrongly.

writing the formula also helps when you are checking, in the heat of the moment.

and think about it -> does anyone, CFA institute, Finquiz, Schweser - blankly just put in numbers and calculate an answer? Why do they do that part of writing the formula out, pray. That is not because it is a guideline. Even the Blue box problems do write the formula out - even though the formula is there 2 lines above in the text.

Valid comment as always CPK.

Past L3 passers. Has anyone passed without writing algebraic formulas?

I ask this because I’m more of an intuative learner, so don’t always know the formulas, I just try and understand what’s going on (option strategies are an obvious example, and for things like leveraged return I use a different formula than specified). I’ll learn the formulas if I have to, but I’d rather not waste my time.

absolutely valid point. And that is perfect for preperation phase. Repeat again and agian formulas and logic behind in blue boxes and in answers. However, at the exam the strategy is a bit diffrerent , ie to find correct balance between time and length of answer. if I provide such detailed respond to each question I would barely finish half of the morning part.

By breaking down my calculation into folmula, however, using actual numbers instead of symborls I clearly send a massage how exactly I arrive at final answer.

But I got your recommendation and its fair one. I have noticed in other questions that I would have missed points solely due to the fact that I did not separately mention that it is futures with 5 month maturity… Still, so weird for me. in the same qestion I use 5/12 period for compounding the risk free rate. It seems obvious that maturity will be 5 month then.

Thanks! exactly what I wanted to hear (confirmation bias :). But really, I hope that’s the case, otherwise will be extremely hard for me to complete am in full. given, that English is not my native it takes me longer to formulate my toughts. As a result I need to go right to the point.