- B and E 2) - I am confused. All three options are incorrect no?
Round 4 1) B, C 2) A, B, C lol
Oh NO! Question 2 should say which of the following is most likely correct! Sorry guys
beatthecfa Wrote: ------------------------------------------------------- > Rus1bus: 2 out of 4 buddy, you’re not doing well > on the beatthecfa challenge bro! Good thing you’re > already through to Level II 
> Yes buddy, 2 out of 4 is not good 
But considering, your questions being too tricky for someone who has been away from books for more than 4 months, 2 out of 4 should be great 
Anyways, I will continue to answer and see if it goes up or down from here For this one, I am not too optimistic though 1) A and C 2) To me all look incorrect. I am missing something here.
got 4/4 :d
Question 1: C and E Question 2: price is falling so inventory is lower under FIFO than LIFO. So the current ration and working capital must be higher under LIFO. Thus, A and C are wrong. B is the least wrong so my answer is B
- C and E 2)C Current Ratio is higher under LIFO because you are using higher inventory prices in the calculation raising the numerator Quick ratio is unaffected because inventory is subtracted so it doesn’t matter if it is higher or lower I say C by process of elimination, but I think C is wrong too. If you use LIFO and prices are falling you are selling the cheaper stuff reducing COGS and increasing inventory value increasing current assets and increasing working capital
Hold on, if prices are FALLING, then LIFO will result in lower COGS and higher inventory, which means that current assets are higher under LIFO and the current ratio will be HIGHER. Working capital must be LOWER under FIFO because inventory is lower when prices are falling. The quick ratio is no affected so it should be the same whether you use FIFO or LIFO. I don’t understand how any of these answers can possibly be correct…
- C&E 2. C
jimmykaw Wrote: ------------------------------------------------------- > 1. C&E > 2. C Sorry I change my answer for the 2nd question (missed the falling prices part when looking at the 3rd option): 2. B seems most likely correc since nothing is mentioned about marketable securities and cash. Quick ratio could go up or down depending on those values.
Answer for Question 2: B. Spread for Life and Discount Margin are usually the 2 margin measures for floating rate securities. Just to double check, i referenced Fabozzi’s handbook. It is confirmed. Answer to Question 1: I would say A. Identifiable intangible assets with a specific useful life are not valued upwards. They are maintained at historical cost and depreciated/depleted over their useful life.
1 A 2 B, quick ratio for FIFO is higher because actual cash saved from taxes
cfagoal2 Wrote: ------------------------------------------------------- > 1 A > 2 B, quick ratio for FIFO is higher because > actual cash saved from taxes Good point. I agree with your explanation for 2nd. But, how did you come to A on 1st one. If the tax base for an asset is more (which means depreciation is lower - probably straight line depreciation), net taxable income will be higher and more taxes will be paid than shown on the financial statements. This will create a deferred tax asset.
Answers in 12 hours fellows… Keep racking your brains
Answers time!!! Question 1: Deferred taxes do not arise when: C: A liability’s tax base is greater than its carrying value. When a liability’s tax base is greater, it results in a deferred tax liability. E: The firm has tax credits that directly reduce taxes. This is an example of a permanent differences, which do not have any effect on deferred taxes. Question 2: The only ‘correct’ statement is: B: The quick ratio is higher under FIFO GUYS! When prices are falling, LIFO COGS is lower, which translates into higher LIFO NI and consequently higher taxes. Higher taxes reduce LIFO cash. Inventory is excluded from the numerator in the quick ratio, but cash is included. Lower LIFO cash implies that the quick ratio is higher under FIFO. I know these questions are a real pain. However, rest assured that these indeed are CHALLENGE questions and even though you will see similar questions on the exam (of course there will ONLY BE ONE RIGHT ANSWER FOR EXAM QUESTIONS) there will NOT be too many of them. A LOT of questions will be very straightforward. That being said, I really advise you guys to get the Elan Guides 11th Hour book. It’s bloody brilliant for reading in the last month. I just made these questions up straight from there. Their tables and bullets are very helpful. More questions soon. Any particular topics you guys wanna be tested on?
Just keep those questions coming… Start with quant…move on to eco then…FRA
Looks like I’ve slapped everyone into spending their weekend at the library… More questions tomorrow spirit… You’re the only one who got both in Round 3… Keep it up! P.S: Spirit was one of my favorite GIJOEs, though he showed up extremely rarely in the cartoons.
ROUND 5 Which of the following statements is most likely incorrect: A: The difference between the Z-spread and the nominal spread is lower for securities that repay principal over time as opposed to in a single bullet payment at maturity. B: When the Treasury spot rate curve is flat, the Z-spread and the nominal spread are equal. C: As the Treasury spot rate curve steepens, the difference between the nominal spread and Z-spread widens. D: The benchmark for the zero-volatility spread is the spot rate curve and the spread reflects compensaton for option risk, credit risk and liquidity risk in the bond. Which of the following is most likely correct regarding perfect competition: A: If there is a permanent decrease in demand, in the long run the number of firms in the industry falls, and each firm produces a lower output than it was before. B: In an industry that was making SR economic profits, in the LR the number of firms increases and each firm produces more than it was in the SR. C: In an industry that was making SR economic losses, in the LR the number of firms decreases and each firm produces more than it was in the SR. D:In an industry that was making SR economic profits, in the LR the number of firms increases and each firm produces as much as it was in the SR.
- A 2. A
2.A