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.
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’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.
