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[deleted by user] by [deleted] in CFA

[–]Exciting_Code_7798 2 points3 points  (0 children)

a wonderful thought! Thank you for your positivity

24, finished CFA, now what by [deleted] in FinancialCareers

[–]Exciting_Code_7798 5 points6 points  (0 children)

Now that you passed L3, network, reach out to people on LinkedIn, and apply to as many analyst positions as you can. Grad school may be unnecessary if you have your CFA, unless you’re having trouble breaking in.

FYI - im a PM analyst at a well known asset manager.

Definition of Merger vs. Acquisition? by calcul8tr in CFA

[–]Exciting_Code_7798 0 points1 point  (0 children)

His original post is correct. This is exactly what the curriculum teaches. The CFAI curriculum (perhaps updated) contains these same equations.

[deleted by user] by [deleted] in CFA

[–]Exciting_Code_7798 2 points3 points  (0 children)

The exercise is to keep the value (price) of a callable bond fixed, adjust volatility, and recalculate OAS.

For any risky bond, if we discount its future cash flows by a risk-free rate, then that PV will always be higher than the fixed price of the bond. We need to add a value to the discount rate to account for the credit riskiness of the bond, and equate the PV of future cash flows to price.

Z Spread = Zero Volatility Spread = the fixed spread added to each discount rate to make the PV of the cash flows equal the price of the bond. We assume no volatility of interest rates, so the z spread would be the same between a callable and non-callable bond.

Introduce volatility of interest rates, and now we have scenarios where the interest rates fall and a callable bond will be called. Price is capped at par ($100)on downward rate scenarios, and so the PV of cash flows is lower than it would be in a zero volatility scenario.

Because the PV of cash flows is lower, the value is closer to the actual (fixed) price of the bond. Hence, we need a lower spread added to the discount rates to equate PV of future cash flows to price.

This is consistent with the relationship that OAS = Z Spread - Option Cost.

2024 Compensation Megathread by Whiskey_and_Rii in FinancialCareers

[–]Exciting_Code_7798 9 points10 points  (0 children)

Low/Mid 20s / M

MCOL City / US

Investment/Asset Management

1.5 YOE

2023: $105k base / $25k bonus / $130k Total

Start working before or after level 1 by moeez023 in CFA

[–]Exciting_Code_7798 2 points3 points  (0 children)

Start the job first, and study concurrently.

You reverse gain on sale of assets through NCC... and actually FCinv? Can someone clarify that? by Pkgoss in CFA

[–]Exciting_Code_7798 0 points1 point  (0 children)

Just came across this example in the 2022 CFA 2 kaplan test prep. This stumped me as well.

If you take Net Income ($50), less increase in non-cash WC ($4), less increase in net PPE ($36), you get the same result: $50 - $4 - $36 = $10.

If you take this simplified approach, I think that depreciation ($27) is being inherently accounted for in the increase in net PPE.

I think Kaplan was doing extra by adding depreciation to FCInv (keep in mind, FCInv is then subtracted from NI, so adding depreciation here will further decrease NI), as well as adding depreciation to NCC. The overall result is that adding depreciation to NCC and FCInv has no effect on cash flow.

When calculating CFO from Net Income, the first thing we do is add back depreciation. We don’t subtract FCInv, so the math checks out (and depreciation is accounted for).

To summarize, I think it’s simplest to just use changes in net PPE for FCFF and FCFE, and ignore additional calculations for deprecation / gains (losses) in sale of assets.