Sample Exam 2 *SPOILER* --- Errors with answers?

Anyone else do sample exam 2 yet? In regards to question 5, I chose the answer choice that said exactly what the answer said and yet I got it wrong… anyone else feel the same way? "Both policies 1 and 2 are inconsistent with the current Standards. According to the Research Objectivity Standards, firms must establish and implement salary, bonus, and other compensation for analysts that do not directly link compensation to investment banking or other corporate finance activities on which the analyst collaborated (either individually or in the aggregate). The Standards also state that research analysts are prohibited from directly or indirectly promising a subject company or other issuer a favorable report or specific price target, or from threatening to change reports, recommendations, or price targets. " Statement #2 states verbatim that part about analysts are prohibited from promising things. Also, Question #9 regarding Economic Pense expense. According to every book the formula is: Service Cost + Interest Expense - Actual Return Yet, the answer for that question says to ADD the actual return… Service Cost 86 Interest Cost 147 Actual Return on Plan Assets 41 Economic Pension Expense 274 — Seriously, wtf. Am I losing my mind and just missing something blatant here or what?

check that the actual return on plan assets is -ve… so -(-41) = +41

FML. I hate this sample exam. I hate CFAI. Statements like “I’m concerned because securities created by some non-agency issuers have lower credit ratings than those issued by Fannie and Freddie” is not “cleary [stating] that agency securities’ implicit government guarantee means they are not exposed to credit risk”.

Oh crap. If they GIVE US Amortization of Unrecognized Prior Service Cos / Unrecognized Loss Do we assume that this IS ALREADY AMORTIZED? (And we don’t worry about the 10% corridor crap - just add it to Pension Expense? )

I have no idea… I didn’t have to use any of that.

i just took sample # 2 and i agree, # 5 the answer is wrong. answer should be C. i got that fixed income question wrong as well. i also forgot that CPR whatever formula in the 1st one… FML SO MANY FORMULAS SO LITTLE TIME. derivs and PM on this test saved me- i got pwned more than i want to admit on the FSA section.

bannisja: I’m the same. Aced the PM and Derivs but messed up on FI and FSA. Long weekend of review ahead.

The same thing happened to me with the first question. I was thinking about calling or emailing them because it says your answer is wrong, the correct answer is exactly what you put. jdane416 Wrote: ------------------------------------------------------- > Anyone else do sample exam 2 yet? > > In regards to question 5, I chose the answer > choice that said exactly what the answer said and > yet I got it wrong… anyone else feel the same > way? > > "Both policies 1 and 2 are inconsistent with the > current Standards. According to the Research > Objectivity Standards, firms must establish and > implement salary, bonus, and other compensation > for analysts that do not directly link > compensation to investment banking or other > corporate finance activities on which the analyst > collaborated (either individually or in the > aggregate). The Standards also state that research > analysts are prohibited from directly or > indirectly promising a subject company or other > issuer a favorable report or specific price > target, or from threatening to change reports, > recommendations, or price targets. " > > Statement #2 states verbatim that part about > analysts are prohibited from promising things. > > Also, Question #9 regarding Economic Pense > expense. According to every book the formula is: > > Service Cost > + Interest Expense > - Actual Return > > Yet, the answer for that question says to ADD the > actual return… > > Service Cost 86 > Interest Cost 147 > Actual Return on Plan Assets 41 > Economic Pension Expense 274 > > — > Seriously, wtf. Am I losing my mind and just > missing something blatant here or what?

Came across the same thing with #5 tonight… I also put C and got it wrong, but can see why… the question says “… or threatining negative reports” the answer says “… or from threatining to change reports, recommendations, or price targets” I guess there is a difference from threatining negative reports and threatening to change an existing reports. You have to memorize all 220 pages of ethics line by line people. Just like the time you memorized the gettysburg address in 7th grade. How do you all expect to pass if you too lazy to memorize 220 pages of ethics? Its some real Bullsh*t these questions…

Question concerning Ethics, PM-Session Security Bank is servicing as a lead underwriter on Solution Ware^s IPO. Burton attends the meeting, which is led by thwo investment bankers and onfe software industry research analyst from Security Bank who covers Solution Ware. With respect to the Road Show meeting regarding public offering, of SolutionWare, did Security Bank comply with the requirements and recommendations of the cFA instiute Research objectivity standards? According to Requirement 4.0 Investment Banking of the CFA Institute Research Objectivity Standards, firms must prohibit communication between members of the research and investment banking divisions. Recommended compliance procedures for Requirement 4.0 include prohibiting analysts from participating in marketing road shows. ----> Therefore, while Security Bank complies with all of the requirements of the Standards, it does not comply with all of the recommendations. (Under Requirement 10.0 Disclosure, firms are required to disclose all conflicts of interest to which the firm or its covered employees are subject, including whether the firm engages in any investment banking or other corporate finance activities. Therefore, “publicly revealing” the relationship is not a violation of the client’s confidentiality.) HOW DOES IT COMPLY WITH THE REQUIREMENT IF THE ANALYST PARTICIPATES IN THE MARKETING ROAD SHOW? AND DO THEY HAVE TO FOLLOW THE RECOMMENDATIONS?

pls someone reply, would be nice! another question along with this: The change to the straight-line depreciation method (from double-declinging balance) method is certainly less conservative. “However, measuring earnings quality based on conservative earnings is an inferior measure.” What does this mean??? Measuring earnings quality based on convervative earnings is an inferior measure???

yellayella Wrote: ------------------------------------------------------- > Question concerning Ethics, PM-Session > > > > > HOW DOES IT COMPLY WITH THE REQUIREMENT IF THE > ANALYST PARTICIPATES IN THE MARKETING ROAD SHOW? > AND DO THEY HAVE TO FOLLOW THE RECOMMENDATIONS? Recommendations are just recommendations, not requirements. I am afraid of L2 ethics, because we have to know these too. Time to re-read for me.

For statement 2 of q5 it is wrong because you cannot promise to issue favorable reports or threaten to write negative reports cos you have to be objective?

If its any consolation I think they updated Q5 to make it correct. The answer (B) was both are inconsistent and that is correct.