Listing Category: General

10 things to do during final CFA exam month.

Final month is the most crucial. During this month, managing yourself, your psychology is more important than preparing for the exam. Anxiety is at it\’s peak and most candidates, despite knowing the entire material,...

CFA Level 1 pass rate trends

The CFA level 1 exam pass rates for the last 5 years uncovered!…

Is This Answer Reasonable?

In many cases, it is easy to estimate the answer before you do the calculation, or, at least, establish a range into which the answer should fall. Improving your ability to estimate an answer or narrow the range of possible answers is valuable for (at least) two reasons:

How to Approach the Level I CFA Exam

If you’ve never taken the Level I CFA exam, you’re in for a real treat. (If you’ve taken it before, you already know what I mean.) This exam will be six hours – three in the morning, and three in the afternoon – and it will be exhausting, both mentally and physically. Thus, you need to be prepared, both mentally and physically, to take this exam.

Choice of Calculator

Lots of Level I candidates agonize over the choice of calculator: Should I choose the HP 12C or should I choose the TI BA II Plus?

Cash (Currency): the Wonky Commodity

Throughout Level II and Level III – and a little bit at Level I – we see calculations that involve commodities; e.g., calculating the price or value of a forward or futures contract on an underlying commodity.

Arbitrage

Arbitrage means the ability to earn a profit without risk. One method by which arbitrage is commonly accomplished by buying an asset in one market, and simultaneously selling an identical asset in another market at a higher price (e.g., T-Notes or T-Bonds). Another is by borrowing an asset (e.g., a currency) and investing it at a guaranteed return that is higher than the borrowing cost. A third is by trading one asset for an identical asset (e.g., ETFs, multi-currency trades, put-call parity).

Applying Level I Economics to Your Level I Studying

The most important topic in Econ is marginal revenue product: the idea that you maximize your profit (minimize your cost) when the ratio of marginal revenue product to input price for all inputs is the same:

Amortization Tables

Although you are not allowed to use Excel (or any other spreadsheet program) on the exam – you have to survive with your lowly financial calculator – it’s still useful to be able to create amortization tables in a spreadsheet, to help you visualize the cash flows and account balances in a variety of financial applications. Three common areas where amortization tables arise are: