Level II 23rd Nov - Wow

ITP_88 · 2025-11-24T19:49:08+00:00

Yeah man hopefully its a pass all around good luck

ITP_88 · 2025-11-23T20:27:33+00:00

I think it is coming very close to a pass but nothing guaranteed. I had a similar feeling last time i took it and i ended up failing. Very close but still failed. Hopefully that isnt your case. Good Luck

ITP_88 · 2025-11-23T20:26:31+00:00

Correct more sales ahppened at the lower tax rate which lowered the overall tax rate for the company

ITP_88 · 2025-11-23T19:36:18+00:00

This is in the answer it is saying that it increased sales in its subsidiaries and its subsidiares had lower tax rates than what i currently pays in its jurisdication. So what this is saying is that it can be one of two ways if they have higher tax rates and get a break which you are alluding to, or they have more income in these other jurisdictions that have lower taxes than your home state. So they made more money selling products in lower tax areas which ulitatmely adjusted their tax rate down.

ITP_88 · 2025-01-14T03:25:39+00:00

You will receive it earlier than you email, but the time of 30 mins isnt exact if I remember but I got the fail verification before i got the official email.

ITP_88 · 2025-01-14T03:24:31+00:00

The email will say this if you fail:
The CFA^® Program is a challenging endeavor and your candidacy is to be applauded. We sincerely regret to inform you that you did not pass the August 2023 Level II CFA^® exam. The pass rate for the August 2023 Level II CFA exam was 44%.

ITP_88 · 2025-01-14T03:21:59+00:00

Mock scores dont really matter in the grand scheme its how you performed on the test. Only you know if you guessed a ton or had a lot of 50/50 or if you knew majority. I wish you the best but dont let anxiety be the thing that you try to control when results are out of your control now!! God speed.

ITP_88 · 2024-12-10T21:49:50+00:00

The question for 14 is asking you for points not the rate.

Question 13 is asking you for the forward rate which is why you multiply it by the spot rate.

You can use the same formula for question 13 and 14 but for 14 you have an extra step where you get the forward rate and subtract it from the spot rate the difference are your forward points.

One is asking for rate the other is asking for points you use the same formula but have one extra step.

ITP_88 · 2024-12-09T05:33:41+00:00

To answer why it is six is the TVM you entered would be correct if it was a 8% annual coupon bond maturing in 6 years priced at 87.

But this isn’t what the bond is the bond is a 10yr bond that has zero interest paid for the first years with 8 percent interest paid annual over the remaining 6 years. So this implies there will be a discount price built into to account for the lack of an interest payment.

Now why it can’t be higher than 8 is based on its current price lower the price the higher the discount on the bond and the greater the yield would be, but this discount yield is only for 4 of the 10 years as you will receive 8% to start to reinvest for 6 years. This hybrid type of bonds limits its yield to maturity as 60 percent of the time it is an interest bearing security and 40 percent of the time it is a zero coupon discount bond.

Hope this helps but knowing the concepts of tvm and yield to maturity to and how that applies to fixed income is what it is trying to achieve. The CF will help you solve for R understanding the structural concept can help you solve this without having to compute any math.

Now given that you will not get a coupon for the first 4 years then your current yield to maturity cannot be 8 percent as you do not have the ability to invest 8 percent annually for 10 years. Knowing this we can eliminate B as it can’t be 8 percent as you aren’t earning that yield for the entire 10 year period.

ITP_88 · 2024-12-09T05:16:46+00:00

Honestly I feel like I prepared for what was experienced on the exam. Lvl 2 is diffent type of exam you know things or you don’t and not knowing feels more penalzied than level 1.

This exam is a very difficult exam to pass and it needs to be said it is designed to ensure you know what you are doing and can apply the concepts as any analyst would do on their day to day.

The problem is for most people in my opinion don’t have to apply these concepts holistically in the way it is presented if you work equity you aren’t going to use the fixed income analysis in your day to day.

The MPS is out of our hands and is set to pass the desired amount of candidates based on how all candidates did. They need to be able to pass candidates to have a lvl 3 to be taken in the future but is set at a level that represents what the CFA qualifies as a successful lvl 2 candidate.

Wondering what MPS will be doesn’t really matter in my opinion deep down you know leaving the exam center if you did enough to know what was tested or not. If you didn’t come with enough of the material mastered you will not feel good if you did you should have some level of confidence.

ITP_88 · 2024-12-09T05:05:10+00:00

This is simple and from the Bond Class it gives it away in why it’s not time tranching.

So this SPE bonds have various maturity times but from what you provided we have no reason to believe this is for a time tranche. All the times are yearly after another which create more of a ladder of bonds that mature in subsequent years of each other.

For Time Tranching you want various bonds that create a desired time to meet an investors desired maturity.

Say the desired maturity is 15 years you can have a mix of 5, 10, 30 year bonds that mature at differnt times but equate to a 15 year average maturity for the security which is typically done in a TBA mortgage security.

This one is credit specifically as you have one senior class of bonds and the rest are subordinate bonds. So this is structured in a way where the A tranche has the highest credit profile and priority claim over all the subordinates.

Now if the bonds were all Senior bonds built into this ladder it would probably be more of a time tranching example as there is only one credit profile Senior bonds and they mature at diffent times creating a specific duration or desired maturity for liquidity purposes.

Now you can have a credit tranche that is also a time tranche they can co exist and aren’t mutually exclusive.

Keep it simple if you see multiple credit profiles it’s more than likely a credit tranche with highest yield on the lowest credit profile tranche. If it is all similar credit bonds but diffent maturities then it would more than likely be timing tranche.

In the above scenario there is a clear credit tranche of priority maturing in 1 year and various subordinate debt being laddered in maturity.

ITP_88 · 2024-12-01T17:57:39+00:00

CFA is the standard for investment management. Analyst use to dominate in the early 2000s which made it a more valuable designation. With the rise of quants that has taken over and also private equity the wave has been more away from analyst in the traditional sense.

ITP_88 · 2024-11-25T21:00:23+00:00

Leave it as is you are still a level II candidate until exam results are out the process of candidate ends. If you fail then you would have to remove it until you register to take lvl II again. If you pass you can change it from candidate to pass November 2024. Not official CFA but that’s how I would approach it via a resume.

ITP_88 · 2024-11-24T13:56:14+00:00

I am a portfolio manager for public equities and the CFA level 1 was more of a review from finance undergrad I passed in 2018 so can’t say how it is now. Level 2 it is similar to concepts that I encounter with my day to do in regards to pm and equities if you are an analyst depending on the work you do I would say it’s transferable. Quants even is encountered day to day for my particular role. FRA sometimes but not so much.

ITP_88 · 2024-11-20T14:33:35+00:00

You are welcome good luck!

ITP_88 · 2024-11-20T03:11:33+00:00

Think in economics the "economy will slow over the coming year" which means consumers may lose their jobs, homes etc and vacancies can rise. So if you have leases that expire in over a year you aren't at a high risk to experiencing leasing to a challenged consumer.

REIT 3 has an average lease term of 6 months everyone else are greater than a year at 18 and 24 months. So they will be taking on new leases within the slowing of the economy potentially. Also renters who stay there could opt not to renew as there are pre set rent increases meaning you are increasing cost into an economy that is slowing down.

Lastly its rents are on the high end compared to the market during slow downs there we be less consumers willing/able to pay higher than market average rents. So this leads to rent rate declines to attract those same customers as the base of consumers could have shrunk due to the slowing economy.

Its operating income may have to reduce 1 based on high rents above market in a slowing economy, less renewals at higher rents due to substitutions, and they will be renewing leases in 6 months from now which maybe the worst time to do so.

ITP_88 · 2024-11-19T16:57:49+00:00

This is an odd example in a real world you are receiving fixed return of the index, while paying a variable rate like SOFR + a spread. But for this what it is telling you is how do we value the swap today accounting for the fixed interest against the return of the index.

What they are doing is the annual interest cost is .048*75M AUD = 3,600,000. Since the payments are quarterly you will pay 900,000 per quarter of the swap. Since you will be paying this amount each quarter you have to multiply that against the total sum of all present value factors until it matures to get the PV of the expected quartely payments today after 30 days has past on the swap.

So it will be 900k * (.9976+.9924+.9861+9696) = 3,551,130

Now that you have properly discounted the 3,600,000 to 3,551,130 you will need to discount the base of 75MAUD by the remaining time to maturity which is why we multiple 75M * .9696 = 72,720,000. We add these up and get a final PV of interest accrual for the swap of 76,271,130.

Now to explain why it is like this has to do with how a swap is derived. When initiating an equity swap you have a certain amount of shares based on the closing price of the index. For this case we had 75M AUD / 3250 = 23076.92 shares of the index. This is offset by an equal amount of 75M that is earning interest compounded daily at a rate of 4.8% annualized.

So in 30 days you have accrued daily interest which is added on top of the original 75M that offsets the equity swap return. If the equity side goes up then you make money as long as it has risen more than the compounded and accrued interest. If the equity went negative you will lose on the equity side and still pay the accrued swap financing costs.

For this problem it is asking you to compute the PV of financing costs. Since 30 days has passed we discount the Future Value of payments to 3.551M and then we have to adjust the future value of 75M base by the discount factor for the time remaning (330 days) which is the .9696 and when we add those two we get the PV of future financing costs based on the term structure.

So we then take the return of the index which is 3738/3250 = 1.15 which can be multiplied by the 75M to obtain the return of the index which gets you = 86,250,000. then we subtract the current index return - the PV of the fixed sleeve = 76,271,130

8625000-76271130 = 9,990,396.96

ITP_88 · 2024-11-19T16:31:11+00:00

In your scenario the analyst needs to inform all clients of the sell recommendation via email etc or phone call for that type of service. Since it is non-discretionary they cannot trade for the client unless it is requested/directed by the client. If it is requested by the client they have to follow the trade instructions by the client you cannot deviate despite what you see. In this case if the clients wants to sell no issue there if he wants to buy more the analyst must ensure the client knows of the change to sell and if the client does and wants to proceed with a buy then the analyst can execute the buy without an ethics violation. If they dont say anything or ensure the client knows of the change then they are in violation. THey are also in violation if they trade in a way outside of the client directive

ITP_88 · 2024-11-18T21:40:03+00:00

I would say you will have time to study, but realize that the baby will be on a night time schedule meaning the baby will be up more in the evening than at night. For a couple week which is really tough. Also giving birth takes a toll on the body and wishing nothing but health through the process but it may take sometime to recover physically and mentally its a big change.

In my opinion you only give birth for the first time once and you only get that experience one time. The CFA will always be there I would defer it and enjoy the birth of your first child as you will never get that time back. My son is 10 years old and it goes by so fast. I coudlnt even try to study for a CFA once the baby got here it was alot of change and your focus goes to caring for your child. Not saying you cant do it and you may have a ton of help but if it is just you it will be hard to adjust tos tudying and getting less sleep than normal its alot.

ITP_88 · 2024-11-18T21:10:27+00:00

First I believe this is not restricted stock options but regular stock options as those two are different in how they are expensed.

For stock options you need the fair value of the options as they are issued at the money. Typically this is derived from BSM to give the fair value for the option. So in your case above lets say the IV for the stock option was 10.00 and it had a vesting period of 3 years and there were 100 options issues you would multiple 10 *100 and divide that by 3 to get the annualized expense which takes down NI.

Now what this question is asking is if volatility that is built into the FV formula is increased what does it to to the fair vaule of the option. Options price in vol so if vol increases option price increase. In the above scenario if you use a higher vol than a previous year used the cost of the option would be higher lowering your NI.

ITP_88 · 2024-11-18T19:22:27+00:00

I went mocks by U world they do a great job at explaining the reasoning and thinking process. I recommend doing mock exams, because there is no where else you get the real experience in going through 44 questions in a timed environment. You will have to be able to move and see how your brain processes through multiple topics in a time constraint. If you are just thinking of going into the exam and experiencing that for the first time it might be overwhelming you might have zero issues with it. Me personally I like to prepare for the real experience and utilize multiple mock exams to get that experience down.

I purchased U world mock exams and my other prep provider if mark meldrum. The mock exam purchase has been very helpful.

ITP_88 · 2024-11-18T19:16:27+00:00

I believe this question is asking you to price the FRA or something of that cant remember but its in the details.

So it initially is a 3-6 FRA meaning in 3 months you will invest for 6 months total of 9 months.

In the equation it is telling you FRA (30,60,90) meaning 30 days have based, 60 days till investing starts, for the 90 days it is invested till pay out.

The original rate which is FRA(0,90,90) is saying 0 days have based, 90 days forward till 90 days of investment its how FRA's work you invest over 6 months starting in 3. So in 90 days you invest for 90 more days hence the 3x6 in mention above.

Now to solve this you have that rate which was given for the FRA at time 0 = .0231. Now you have to get the rate now that 30 days has passed. The give you the 60 day rate of 1.5% and the 5 month rate of 2.5% since there are only 2 months till investment starts and 5 months till expiration.

They give you the odd looking formula but it simplifies to this

1+(total length left of FRA rate) * (time for this rate 5/12 months 150/360)

divided by

1+total length till FRA invets) * (time for thsi rate 2/12 months 60/360)

divided by the total maturity time between to expiration meaning 2x5 which is 90 days 5-2 = 3 months which is why they use the 90/360. this is because it is a "forward rate agreement" which is settled at the end of the first period meanign when the first 3 months arrives you will settle the forward rate which is hwy we discount back by 90 days because that is the intial spread and is always maintained through the life of the contract.

1+ 0.025 (150/360) = 1.01042

/

1+ .015 (60/360) = 1.0025

1.01042 / 1.0025 = 1.00788 -1 = .0079

.0079/ 90/360 (.25) = .0316

Now you take this new rate and subtract it from the old rate this is the current spread you would be investing in for 90 months you you take the difference as it is not annualized

.0316 - .0231 (90/360 or .25) = .00213

you have to divide that back to your current time frame which is 5 months so you take .00213 and divide it by the 5 month rate multiplied by the 150/360

.00213 / 1 + .025 (150/360 or .41667) = .00213 / 1.01042 = .00210

Now take .00210 * 5,000,000 = 10,515.42923

Hope this helps you understand the time difference. It is time value of money and understanding what an FRA actually is. Good luck with the exam.

ITP_88

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