WTF? Schweser 2011 Practice Exam 3 Book 1 #18.5

CFA Level III
#1

WTF is this? I don’t remember the strategic asset allocation method being mentioned in the text.

#2

Bump

#3

Yes it’s there. Reading 26. In fact, I’m pretty sure it’s in at least 5 LOS’s for reading 26.

#4

It’s not there. The Schweser question was asking for *annual return* using the strategic asset allocation Method. This is performance attribution, which is discussed in one of the later topics. Schweser claims the answer is in SS 18, 48.j. However, it’s not there. The only really quantitative things in reading 26 are corner portfolios and utility-adjusted return

#5

I stand corrected. Just looked up this problem myself. I remember when I did this test I had no idea what to do, even after reading the answer. I chalked this up to something I’ll be guessing on if it appears on the real test.

#6

I just looked at the question- and I could be wrong, but this looks to me like the way they used to teach how to allocate cash into carve-outs in portfolios. And as far as I know, it’s not an LOS this year. Anyone think otherwise? They are saying it is in SS 18 which would make sense, that it was in GIPS last year but not in the revised version.

#7

smokin’hot Wrote: ------------------------------------------------------- > I just looked at the question- and I could be > wrong, but this looks to me like the way they used > to teach how to allocate cash into carve-outs in > portfolios. And as far as I know, it’s not an LOS > this year. Anyone think otherwise? > They are saying it is in SS 18 which would make > sense, that it was in GIPS last year but not in > the revised version. That is correct. Schweser lacks a lot at level III.

#8

I had the same impression on that question. I couldn’t find anything on “Strategic Asset Allocation Method” in the CFA materials.

#9

The strategic asset allocation method was a method to allocate cash to carve-outs, which is no longer allowed under the new version of GIPS. I think Schweser messed up on this one. The question is probably old and they never removed it from the practice exam. In theory, I suppose they could test us on this, but as this is no longer included in the current version of GIPS, I think it’s doubtful. If anyone cares, there’s some information on this calculation in the guidance statement for carve-outs (which is mentioned in a footnote at the bottom of page 306 in the CFAI materials): http://www.gipsstandards.org/standards/guidance/develop/pdf/gs_treatment_of_carve_outs_clean.pdf