what about the fixed income question you substituted for the repeated question? thanks.
cfasf1 Wrote: ------------------------------------------------------- > what about the fixed income question you > substituted for the repeated question? thanks. I thought that I updated my word doc when I updated the thread, apparently not… Q. 4 Your answer: C was incorrect. The correct answer was B) the net value of the position with the hedge will decline. The most likely result is that the position with the hedge will decline because of the mortgage security’s negative convexity. As the yield decreases, the prepayment option goes in the money and the value of the security does not go up by as much as the value of the short futures position goes down because the futures position has positive convexity. This question tested from Session 10, Reading 32, LOS a
5/6. boomtown.
My C hedge is perfect. My D hedge will not work well this year though.
nice work, ilvino… blah, i got some work to do.
I’ve been slithering around these SS lately, so that’s the only reason I got a few of these right. Still behind the curve but trying to tear it up through the rest of April. Can’t wait to crush this thing with you guys in a few weeks.
LOL, looks like we are both in trouble with only 3/6 right
Eh no worries. Its only 6 questions. I haven’t started answering questions yet - start that next week so I usually start kicking ass at that point.
Well I had gone through it and then saw he already posted answers. However, I had gone A A A B A C 4/6 I will take it. I thought I had question #2 to since of course I actually got one of the possible ones.
50%. Although model question (opinion and facts) was BS in my opinion.
Yes - but the CFA does not care if you think their questions are BS. Bankin - we need a larger population of questions. I do remember from Level I that as n approaches 30 the sample converges on the true population parameters. You better start typing now if you want to go out this weekend! 
ValueAddict Wrote: ------------------------------------------------------- > Yes - but the CFA does not care if you think their > questions are BS. Bankin - we need a larger > population of questions. I do remember from Level > I that as n approaches 30 the sample converges on > the true population parameters. > > You better start typing now if you want to go out > this weekend! Every Wednesday I get together with another Level III candidate, we do a practice exam comprised of medium and difficult questions and have some good discussion. When I score the exam I post the ones we missed that I think would be challenging and/or beneficial for my AF brethren. Last week I posted 5, this week I posted 6, next Thursday I imagine I’ll post a comparable number. By the time the exam comes around you should have an adequate sample size.
this is good stuff, bankin’. thanks.
Bankin’ Wrote: ------------------------------------------------------- > ********ANSWERS from QBank********* > > 1. Your answer: A was correct! > > total value-added = overall actual fund return – > overall benchmark returns > > = 10.2 − (-22.5) = 32.70% > > Blakely’s Miranda Fund was able to outperform the > S&P 500 index by 32.7%. > > This question tested from Session 17, Reading 47, > LOS l, (Part 1) > > > > > > 2. Your answer: A was incorrect. The correct > answer was C) 0.0687. > > > First we compute the implied net amount to be > borrowed after the cost of the call: > > $ 14,995,979 = $15,000,000 − $4,000 × (1 + > (0.038 + 0.025) × (30 / 360)) > > The most the firm will expect to pay is the rate > associated with the strike rate: 4% plus the 250 > basis-point spread equals 6.5%. This gives the > nominal cost of the loan: > > $243,750 = $15,000,000 × 0.065 (90 / 360) > > The highest effective annual rate is: > > 0.0687 = ($15,243,750 / $14,995,979)(365/90) > − 1 > > This question tested from Session 15, Reading 43, > LOS b > > > 3. Your answer: A was incorrect. The correct > answer was B) > > does not distinguish the opinion, based on his > model, from the fact. > > > While any of the answers can be shown to violate > CFA Institute Standards, this cannot be determined > conclusively from the information given. However, > the scenario clearly indicates that Anderson does > not distinguish between opinion and fact in > communicating to his clients. Therefore, he > violates the Standards on this basis. > > This question tested from Session 2, Reading 4, > LOS a, b > > > 4. Your answer: A was incorrect. The correct > answer was B) > > does not distinguish the opinion, based on his > model, from the fact. > > > While any of the answers can be shown to violate > CFA Institute Standards, this cannot be determined > conclusively from the information given. However, > the scenario clearly indicates that Anderson does > not distinguish between opinion and fact in > communicating to his clients. Therefore, he > violates the Standards on this basis. > > This question tested from Session 2, Reading 4, > LOS a, b > > > 5. Your answer: C was incorrect. The correct > answer was A) Hoover will be disappointed by the > subsequent movements in Bison stock and Kershaw > will be pleased by the subsequent movements in > Bison stock. > > When overconfident investors revise their > forecasts based on new information, they tend to > overestimate the impact. As an overconfident > investor, Hoover will be disappointed by the > subsequent movements in Bison stock because of her > initial overoptimism after the earnings > announcement. Investors who use anchoring tend to > underestimate the impact of new information > because they are anchored in their old beliefs. > Kershaw will be pleased by the subsequent > movements in Bison stock because he will have > initially underestimated the impact of the > positive earnings announcement. > > This question tested from Session 3, Reading 9, > LOS a > > > 6. Part 1) > Your answer: A was incorrect. The correct answer > was C) A short time horizon, low liquidity needs, > with assets managed according to the “prudent > expert” rule. > > > Time horizon – The time horizon for this plan is > short. Since the plan sponsor, WWT, is currently > in bankruptcy and would not be considered a going > concern, it cannot provide any funds to minimize > the plan deficit. Since there is only a 5-year > time horizon for the plan coupled with the > uncertainty on the disposition of available funds > in five years, the primary goal of this plan is on > capital preservation with a secondary focus on > income and a third goal of some growth over the > time horizon. Five years is a short time frame to > achieve these goals. Any IPS developed must > consider capital preservation first and then > consider a total return approach to preserve the > plan from the effects of inflation. > > Liquidity – The liquidity needs of this portfolio > are low primarily because only 1% of the plan > assets are currently being paid out and no more > employees are expected to retire over the next > five years. The average age of the workforce is 30 > and young and will not require any distributions > until the expected termination upon its fully > funded status. Therefore, the plan only has to > provide for its current retirees at a rate of 1% > per year. > > Laws and regulations – This pension plan is > governed by ERISA and must adhere to the prudent > expert rule. As such, diversification is necessary > to minimize the risk of large losses to the plan > and capital preservation. > > Taxes – There are none to be considered for the > pension plan. However, upon the distribution of > the plan assets after five years, there could be a > tax impact on the plan participants. Tax counsel > is advised here for the plan and its participants > to also do some tax planning for the ultimate > distribution of the proceeds of the plan in five > years. > > Unique circumstances – WWT, the plan sponsor, is > in a Chapter 11 bankruptcy filing and, therefore, > cannot provide any funds to meet the plan’s > underfunded status. The plan must also consider > the administration of the distribution of the > proceeds of the plan after five years to its plan > participants. Should the underfunded status remain > (assuming a higher than expected level of benefits > are paid out to retirees or the expected rate of > return does not meet the level of the plan > liabilities) special policies and procedures may > need to be considered at the time of the > distribution of the plan assets. > > This question tested from Session 5, Reading 21, > LOS j Are prudent investor rule, prudent man rule, prudent person rule, and prudent expert rule the same?
that’s what threw me off. i know prudent investor and prudent man (person) are not the same. i never even heard of prudent expert…
cfasf1 Wrote: ------------------------------------------------------- > that’s what threw me off. i know prudent investor > and prudent man (person) are not the same. i never > even heard of prudent expert… In the Schweser note, they mention prudent person rule for legal/regulatory constraint for life insurance company. In the CFAI curriculum, they said prudent investor rule for legal/regulatory constraint for life insurance company. Based on this, I think they’re the same? What you think? Check it out. From level 2, if I remember correctly. They revised Prudent man rule to Prudent investor rule. I have no idea about prudent expert rule.