June CFAI Mock Exams: WRONG/ERRONEOUS answers?

CFA Level II
#21

My bad! Didn’t see the part about $66 in capitalized interest! Thanks

#22

Guys, in the AM session version (b) … Question 6 of the Fischer case “the very last question of the last case”

shouldn’t the answer be © instead of (a)

?

I always thought that when required return is less than expected return, the stock is undervalued !!

#23

CAPM predicts a required return of 14%, the expected return is only 12%, thus the stock is overvalued.

#24

What about the Kostecka Case, question #4 (PM exam), why is fair-deal the least likely violation? I would think it would be communicating with clients since that’s about the only thing he did correctly. Still can’t figure this one out

#25

In your opinion, in which respect did he break the Standard about fair dealing?

#26

By implying his client should sell their shares because “he did”

#27

But when EBIT was calculated, the answer says EBIT = Sales-COGS-SG&A

Shouldn’t depreciation be accounted for when calculating EBIT as well? And then to adjust it, add back 34…

#28

I agree, MissM b/c that’s why we add back the depreciation expense (stemming from capitalized interest) to EBIT.

#29

I agree, so he violated the Standard about Communication with Clients. The question is about which Standard was least likely violated by him (=fair dealing).

#30

thanks a alot

#31

I can’t find any of these cases in june mock. Are you guys talking about version b - march?

#32

Fair enough, thanks for the feedback!

#33

I am reviewing the Mock discussed here, which someone pointed out was the March mock. On this thread, it’s noted that the CFA answers might have errors. I looked on the CFAI website and couldn’t find an errata.

Did the CFAI put out errata w/r/t these practice tests?

#34

On the Piezeo question, for the EBIT/Interest Coverage calc, I fully get the calc and its logic, but what I don’t get is why the “Depreciation Expense” mentioned in Note 11, is not in the fully reconciled Income Statement on the page before.

Am I missing something?

#35

Hey Kyle, I was wondering the same thing but after reviewing the course it is because of the difference between gross and net pp+e. In the question it says ‘Long term assets, Net’ in which case depreciation has to be added back here as well as in the line item for +NCC. If it had said ‘Long term assets, Gross’ we wouldn’t need to add the depreciation here. Can someone please confirm this??

#36

Hey guys, it might be wise to review the EOC if the mock exam quetions don’t make sense. I’ve had a few issues as well but EOC might be a better review at this point.

#37

I agree and National Plastics looks wrong to me-

why are we adding depr back to change in fixed assets for the FCF calc? - I do don’t see any indication a disposal occured so the PP&E given is net (we just use change in PP&E)- I think the answer is wrong because they double added deprecation - if there were a disposal then we would add back deprectaion to starting PP&E, and use chnage in PP&E as the plug to get to ending PP&E. Anyone else notice this?

#38

see my post two above yours.

#39

Thanks Lucky_27. What I meant was in the calculation of EBIT, instead of Revenue - COGS - SG&A (which was what the solution provided), shouldn’t it be Revenue-COGS-SG&A - Depreciation expense?

Agree with you on the adjustment of adding back the portion of depreciation attributable to the capitalized interest. It’s just the EBIT formula that really bugs me.

#40

I think my question in the post above is related to this. I am not making sense of the depreciation expense here either