In the econ section of CFAI pg 551, it says “readers familiar with previous editions should be aware of the change in notation. We will use euros : dollar to mean the price of one euro in dollars. With this notation, the quoted currency is the first one (here euros)P and its price is measured in units of the second currency (here dollars).” "An american investor seeing a quote of euro : dollar = 1.25 expects to pay 1.25 for one euro. He is viewing a direct quote, the price of the foreign currency." In the FSA section on translating financial statements of foreign subsidiaries on page 165 your given euros per and you translate the denominated financial statements by multiplying the amount by euros per dollar in order to get euros. This same convention is used throughout the FSA section. So although they don’t define direct or indirect quotes in the FSA section, it seems like they are using the old notation. Am I right here? If so, this is an extremely important distinction as in FSA you have to understand whether a currency is appreciating or depreciating and understand how to translate financial statements. If you were given a question that combined FSA with interest rate parity or something from econ, what would you do?
bradleyz… I hope that does not happen. I have trouble with that piece of the curriculum as it is… on another note - weren’t you going to go to the John Harris accounting class over the last weekend? How was it, if you went?
The foreign currency material has always been tough for me. Yes, I went to the John Harris class. I had studied FSA a while back and reviewed all the topics before the class, so I knew the material relatively well going in. I thought that overall he did a good job explaining the material and it was helpful having old test questions that he updated. He was obviously extremely knowledgeable about accounting and it came through his presentation. It was nice going through the topics and then doing questions based on them right after. He answered most people’s questions pretty well. Also, the material he gave is a good summary and explanation of the FSA material and is what I will use to review for now on. One of the drawbacks is that he did spend some time telling us a few things that he said wouldn’t be on the exam. Some of the other students also asked questions that were interesting but did nothing to help me pass the test. After spending 2 days traveling and all that money I wish he had remained more focused on the material and not gone off on a tangent when prompted to by other students. There were also a few minor things I thought he could have explained better. Overall I think it was worth it because he cleared up some areas I was somewhat confused about. I think its best for people who have studied FSA but need help putting it together and understanding how to solve the kinds of problems that will probably be on the exam. I think what was also a benefit for me what that if forced me to stop and think about things, since I tend to just read through them at home. I wish I had a class like this for equity and a few other topics to help put everything together. Another benefit is that he said to call him with any questions. I think having access to his explanations and knowledge will be beneficial.
What did he say would not be on the exam? just curious. I am still going to study everything, but maybe I will focus a tad less on those areas. Pretty risky claiming that something won’t be on the test, as someday the material will be on there and those are 6 questions you could get wrecked on.