Now that most people are through a few mocks, or have at least done a ton of questions, I wanted to see what people feel are the key things needed to master before D-day. Of course whole material will be tested, but I still feel like like I have to know the below inside-out:
Different Parity formulas and Fisher relation (ECON)
Intercorporate Investments (FRA)
Pension Accounting (FRA)
Valuation Models, Econ. Profit, Residual Income (CF)
Dividend, FCFF and FCFE Valuation Models, single, 2-stage, H-Model (EQ)
Binomial tree valuation (FI/DER)
Forward Pricing, FRAs, Currency forwards (DER)
Treynor-Black model (always seems to pop-up on mocks) (PM)
Would be interesting seeing what other people are putting extra focus on, I know that I will sleep much better the night before the exam if I know I have the above 100% covered.
All the best,
Thats some A+ work there woodman.
Honestly, if I had to pick a few key ones:
Those are the two that really summarize what level 2 is about and serve to improve the quality of financial analysts.
Lots of other stuff is fluff.
The binomial trees are interesting but I think of them as busy work. They serve no real purpose in the real world so including them and being tested on them doesn’t mean much. I would rather hire someone that got 70 on the two topics above and 0% on binomial trees than someone that got 67 on the two topics above and 100% on binomial trees. (all else being equal)
Just realized we are talking about the exam, not the real world
In that case:
Calculate all items in the anova table, know which tests are used for each errors
Economics - know all the “fluff”; Growth theories, balance of payments accounts. I think this is a good place to test if people have read all the material by testing some of the less-formulaic topics
NPV for two projects with multiple timeliness + more fluff (qualitative stuff like dividend theory)
Value a firm using Residuals / FCFF
No idea about alternative investments
Put-call parity and synthetic puts
The one thing I think they won’t test is LIFO to FIFO because LIFO is going to become obsolete in 2014, so knowing how to convert it just doesn’t seem like something important for a CFA to know.
I’d say anything that showed up on L1 topics but are covered in more depth in L2
OAS, Z-Spread, etc.
Free Cash Flow
CML vs. SML
Real Estate Valuation models
LOL!!! I just burst out laughing at that one!!!
A solid contribution!
I’m gonna go ahead and toss out something that seems like it’s on the periphery - I’m gonna say Gordon Growth - if you don’t like it, go ahead and throw it back.
never really considered Gordon Growth or CAPM…damn better study up
My contribution would be Ethics. It’s hard to beat Woodman’s input, but I thought I’d still try.
memorize the forumlae for Standard diviation and All the Means ( aritimatic, geomatric and harmonic)