# How insane is Equity?

Just doing some EOC questions for the Equity section and I had a couple questions. I realize the test is now half the number of questions as Level I, is one f the reasons because Equity questions may require you to make long tables projecting cashflows 5 years out, get a terminal value, and then PV that terminal value and the cashflows in between back to today? Also let’s say question 1 asks for the FCFF or something, so you projected the cashflows. Can a second question require getting the aswer from question 1 right? Either directly (plugging in the answer directly) or indirectly (taking the correct answer from question 1 and making an adjustment)?

no. they will not build on questions.

SkipE99 are you still around for L2? Equity and FRA are going to kill us on exam. If you don’t get these two sections good, YOU WILL FAIL. Believe!

i LOVE equity - its my favorite section and i am looking to get a solid result here. IMHO this is why H models are important - test without compiling huge cashflow tables. You should be able to calculate FCF in year 5 without going through the other 4 years first, and the Terminal Value and the PV of the TV. Good Luck!

Isnt their formulas to take away all that work?, not sure which you prefer learning the formulas as per CFA book, or using the suggested schweser route and doing each cashflow individually

I’d prefer that over cranking out a two-period binomial option vignette.

I believe the reason for 1/2 the questions for Level II is just because of the vignette format. More reading/interpretation required for the Level II test. Actually…I love the Equity section!

FRA: the FRA in derivative section? pepp Wrote: ------------------------------------------------------- > SkipE99 are you still around for L2? > > Equity and FRA are going to kill us on exam. If > you don’t get these two sections good, YOU WILL > FAIL. Believe!

hw0799 Wrote: ------------------------------------------------------- > FRA: the FRA in derivative section? > > pepp Wrote: > -------------------------------------------------- > ----- > > SkipE99 are you still around for L2? > > > > Equity and FRA are going to kill us on exam. If > > you don’t get these two sections good, YOU WILL > > FAIL. Believe! No. FRA = Financial Reporting & Analysis aka Accounting

going through mass amounts of calculations repeatedly has given me a much greater understanding and comfort level with the material. eventually they dont seem so tedious and can be done quickly. doing binomial trees for options and bonds was also well worth it. I’m on L3 now and still draw upon that experience for CFA word as well as real life applications

RI projections keep fucking me over and over and I just wanna give up on it