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Simply Awesome…tht was really useful
Now that’s really something. for this effort and for sharing it, i hope you pass the exam mcf… Thanks
How is everyone studying quant. on here? I mean, are you covering EACH AND EVERY SINGLE thing? There’s a LOT of stuff to revise and I’m losing patience with quant. Rest is okay.
Excellent! Thanks for the ‘Hot Sauce’, bud.
Thanks! Great thread!!! I have one more, to calculate the weighted cost of debt, do not use the weighted method, instead, use the latest YTM of new debt to calculate the entire debt cost of an organization!
The characteristics of a coherent financial reporting network are transparency, consistency and comprehensiveness. Ending retained earnings = beginning retained earnings + net income - dividends. Net income is not an element of the financial statements, but the net result of revenues less expenses. The elements are: assets, liabilities, owners’ equity, revenue and expenses. When a company issues a zero-coupon bond, cash flow from operations is overstated over the life of the bond. Interest expense is recorded for income statements purposes, but is added back in the statement of cash flows as a non-cash adjustment to cash flow from operations. FIFO inventory = LIFO inventory + LIFO reserve. FIFO COGS = LIFO COGS - Change in LIFO reserve. Interest expense is an income statement account and the common-size percentage should be computed as a percentage of sales for that company. A change in the natural rate of unemployment shifts both short-run and long-run Phillips curves. When the supply of the factor is perfectly elastic (horizontal supply curve), the factor’s entire income comprises opportunity cost. When the supply of the factor is perfectly inelastic (vertical supply curve), the factor’s entire income comprises economic rent. The seven steps in hypothesis testing are: 1) Stating the hypothesis. 2) Identifying the appropriate test statistic and its probability distribution. 3) Specifying the significance level. 4) Stating the decision rule. 5) Collecting the data and calculating the test statistic. 6) Making the statistical decision. 7) Making the economic or investment decision. Revenue recognition before the cash is received will result in the creation of an accounts receivable, an asset, whereas when the cash is received before the revenue is recognized a liability, unearned revenue, is created. Taxes payable is the current liability resulting from the current period taxable income based on taxable income. Under both U.S. GAAP and IFRS the unrealized gains and losses arising from carrying available-for-sale securities at market value are reported in equity as part of accumulated other comprehensive income. The profitability index = 1 + (NPV / initial investment) The optimal capital budget is the amount of new capital required to undertake all investment projects with an IRR greater than the marginal cost of capital. (NOT WACC!) Money market yield = discount-basis yield x (face value / purchase price) Purchase price = face value - [face value x discount-basis yield x (days to maturity / 360)] The historical cost basis of assets in P/B ratio is a drawback not a rationalization for using it as a measure of relative valuation. Neoclassical growth theory assumes that marginal productivity of capital declines as more capital is added. Thus, it predicts that the long-term level of GDP depends on the country’s savings rate but not the long-term growth rate because of diminishing marginal returns and reaching a steady state. This implies increase in dividends, as the new level of GDP is reached, but not an increase in the dividend growth rate. A call market is an exchange (secondary market), not a primary market. Typically, it is characterized by a few listed stocks or a small number of active investor-traders. Buy-sell orders are cleared at a single price (equilibrium price) that satisfies most of the orders. Free cash flow to equity is after subtracting payments to both debt holders and preferred stockholders. When volatility increases, the price of options increase. When interest rates increase, call option prices increase. An investor faces event risk in a corporate bond and interest rate risk in a long dated, fixed coupon rate bond. Central banks should guide markets and not follow them. The reason for this is that financial markets are susceptible to speculative bubbles that stray from fundamentals. Central bankers must keep their eyes on fundamentals. (OK CFAI!)
Good one ditchdigger!
The F-test is used for testing a difference in variances, among other things.
In tests of whether the variance of a population equals a particular value, the chi-squared test statistic is appropriate. The Chi-squared distribution is not symmetrical, which means that the critical values will not be numerically equidistant from the center of the distribution, though the probability on either side of the critical values will be equal (that is, if there is a 5% level of significance and a two-sided test, 2.5% will lie outside each of the two critical values. The F-statistic can be computed using samples of different sizes. The F-distributed test statistic, F = s12 / s22, is used to compare the variances of two populations. Nonparametric tests are not concerned with parameters; they make minimal assumptions about the population from which a sample comes. It is important to distinguish between the test of the difference in the means and the test of the mean of the differences. Also, it is important to understand that parametric tests rely on distributional assumptions, whereas nonparametric tests are not as strict regarding distributional properties. For a distribution that is non-normally distributed, a nonparametric test may be most appropriate. A nonparametric test tends to make minimal assumptions about the population, while parametric tests rely on assumptions regarding the distribution of the population. Both kinds of tests are often used in conjunction with one another.
Great thread. My contribution: Read time series data in the correct order. I read the question left to right assuming increasing chronological order! 47 Assume U.S. GAAP (generally accepted accounting principles) applies unless otherwise noted. An analyst gathered the following information for a company: Ratios 2005 2004 2003 Inventory turnover 5 6 7 Total asset turnover 6 5 3 Accounts payable turnover 9 9 8 Accounts receivable turnover 11 12 15 All other factors being equal, which of the following is the best conclusion with respect to the information above? From 2003 to 2005, the company’s:
After Tax cash flows for NPV - Company doesn’t care about pretax income/revenue. MMY
k=(Div*(1+g))/P Using D0 when D(1+g) is needed.
Well this pretty much covers every single question I got wrong on Mock 2
initially, AP < MP, then AP = MP, then AP > MP. MC = AVC when AVC is at its minimum. ATC = AFC + AVC The AFC curve declines initially, but as output increases it flattens because a fixed cost is being averaged over more and more units of output.
Thought i’d bring this one back to the top.
bump again…
great post, thanks!
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GIPS - Composit has fee paying discretionary accounts.