This question usually comes up closer to the exam but i was wondering if those who passed have any good mnemonics that helped them through the exam. Havent had a chance to look at the the level 3 curriculum but i know it is a lot more theoretical… Also is it better to think of this exam as a 100% written and try and memorize as much as I can, or are their specific areas that are more testible as multiple choice nd others written… Looking for a plan to start studying.
too early for this
do a search bro
there have been many threads on this in the past. if you search SAMURAI you will find some, for example http://www.analystforum.com/forums/cfa-forums/cfa-level-iii-forum/9718534
and this “don’t miss this” thread http://www.analystforum.com/forums/cfa-forums/cfa-level-iii-forum/9985960
the scribd link noted there http://www.scribd.com/doc/32063383/LIII is still up, might want to grab.
Parting gift, for everyone starting level 3. Here is my cheat sheet that helped me get through.
Asset Manager Code Loyalty to Clients Investment Process & Actions Trading
Compliance & Support Performance & Valuation Disclosures
Loss Adverse Over confident Self Control Endowment Regret Status Quo
Investment Policy Statement R – R – T – T – L – L – U Return & Risk is based on • Time Horizon • Tax Considerations • Liquidity Needs • Legal & Regulatory • Unique Circumstances
Review Statement if change in Performance Shortfall Investment Vehicle Tax Market Conditions Circumstances Good Asset Classes are DEHLI: Diversifying (mutually) Exclusive Homogenous Liquid (World’s) Investable Wealth
SAMURAI for a valid benchmark: Specified in advance Appropriate Measurable Unambiguous Reflect current investment opinions Accountable Investable Extensions to classical immunization Multifunctional Duration (Key Dur) Increased Risk (Excess) Multiple-Liability immunization (Liq assets) Contingent immunization (Safety net)
Core WACC Risk of pension ignored Overstates WACC Profitable projects rejected Supress Share Price
FLOAT Free float is low Liquidity is low Ownership restriction Authorized investors are often institutional Tax – Discriminatory
Enterprise Risk Management Market Risk Liquidity Risk Credit Risk
Settlement Risk Model Risk Accounting Risk Regulatory Risk Tax Risk Political Operating Legal
Second Market Trading Bonds (4xC,2xS,Y/N) Credit – upside Credit – defence Curve – Adjustment Cash flow reinvestment Structure Trade Sector-Rotation Yield/spread Pick up New Issue Swap
Residence Source Tax Deduction Exemption Credit
Alternative Investments (LyDDDiA) Low Liquidity Diversification Potential Due Diligence Requirement Difficult to Value Access to Info difficult
Information Processing Errors – InFAAMation Framing Anchoring and Adjustment Availability Mental Accounting
Physiological traps – Economic Data Process vs. outcome Recallability trap Overconfidence Status quo Confirming evidence Anchoring
Availability Bias – Can Never Really Remember Categorization Narrow Range of Experience Resonance Retrievability
Overconfidence H- Hindsight A - Availability I - Illusion of Control I -Illusion of knowledge R - Representativeness S - Self Attribution
Lead Indicators Money Suppley Interest Rate spread Stock Price Avg weekly hours Consumer Expectations
Lag Indicators Inventory to sales CPI
Macro Performance Attribution Policy Allocation Benchmark portfolio return Funds returns, valuation & external CF
Macro Performance Attribution steps – National Rifle Association Blows it away Net Contributions (Ext CF) Risk Free Assets (Risk Free Rate) Asset Class Allocations (Pure Index) Benchmark Returns (Manager BM) Investment Manager returns (Active R) Allocation effects (Deviate from policy)
Excess Return – Int Bonds – MC DISC Market selection Currency selection Duration management Invest outside benchmark Security selection Credit analysis
Benchmarks – Real Estate NCREIF – Direct, ¼, value weighted, low volume, low corr, de-leverage, stale price bias NAREIT - Indirect; publicly traded; real time; market-cap weighted
Active vs Style S = B – M A= R - M
FX Forecasts P = PPP E = Economic strength P = balance of Payments SI = Savings & Investments
FACT in GIPS: Fair value, Fee Accrual Accounting, Actual Carve-out, Cash Trade Date Accounting
Benefits of DD Discipline Desired Exposures
For bond relative value methodologies: T P L S S S C C A Total Returns Analysis Primary Market Analysis Liquidity and Trading Secondary Mkt rational & Constraints analysis Spread analysis Structure analysis Credit Curve Analysis Credit Analysis Assets and Sector allocation
Algorithmic Trading Breaks big orders into small orders Automates according to set rules Minimizes trading cost and risk Minimizes market impact
Hedge fund bias - PBS Popularity Bias Backfill Bias Survivorship Bias
P.S don’t B.S P - Portfolio constraints S - Story disagreement B - Buy and hold S - Seasonality
Growth G-rowth in capital stock E-mployement growth T-echnological advances
M-acroeconomic stability I-nstitutional efficiency O-pen trade W-orker education
Benchmark of Risk Exposures Duration Key Rates PV of Distributions Sector duration Sector quality Quality spread contribution Sector/Coupon/Maturity weights Issuer exposure
thank you sydneyrock!!
Can I download this without being a scribd member?
Thanks double dip, Sydney rocks. Anyone else feel free to add more parting gifts and early chrismass presents… Clark_CFA_Candidate: I think you can copy and paste, but the format becomes messed up.