CFA Level-1 Part II

I posted this in an Orkut community. I hope its useful to someone here.

I attended the exam in Nepal. Exams started and ended sharply at correct time.

I feel I have done well. Lets see.

I would say they tested the basic fundas to the core. They did not touch advanced fundas much. If one had read the books well and thoroughly, it would have definitely been easier. Solving a few qp's would have given an idea. CFAI mocks for 100$ resembled the main exam though main exam was easier than CFAI mocks. Schweser mocks were unnecessarily tough and did not focus much on the "basics" part whcih CFA tested. Numericals were very less in main exam. Second session was slightly more difficult than 1st. I found ethics tricky in 2nd.

I would definitely say that if one prepares and is willing to slog (to remember the many concepts) it is a passable exam. If one takes it lightly and skims thru the text (schweser), you may lose out on a few qns.

I thought the most deadly questions in ethics were those were we have to identify the type of violation. 4 options were given and one of them least likely violated it. One really had to know the fundas in ethics to crack those. I already am discounting 10/36 questions in ethics since they were awesomely tricky.

I felt schweser Q Bank of 3300 questions is a much better practice ground. It tests your basics in a much better way than the book 6/book 7 exams of schweser. Book 6/ Book 7 is olympiad type of stuff which will help to understand concepts if you have time to spend on those. If one does not have time to study and does only book 6 and book 7, opportunity cost is too high. Its worth spending 100$ on the mocks. But if they dont give the mock papers to review after completing exam (they dont give as of now, so there is no way you can see the questions once test is over,only solutions can be seen), its a bit futile.

Some more points which I did not post in Orkut for PG junta:

1. Be patient while reading the questions. Dont rush thru it. Some are deceptively easy and are easy except for a word or 2 in the question. Like "annual" instead of "semi annual". "This year" vs "next year". Assuming this wrongly will give wrong answers. I made some 5-7 mistakes like this.

2. Don't skip any topic unless you don't have time. They more or less tested everything.

3. As engineers, sometimes we may concentrate more on formulas and look at theory as cut-the-crap. Dont do that. If reading from schweser, better go thru the whole text book, each line. Its just 5 books and not too tough.

4. Also, remember things these way: There will be many things in schweser which would be like: There are 3 types of .... There are 5 reasons why.... There are 6 types of risk. They are.. There are 3 types of probability.. etc Or They may not specifically quote like There are n types of... But it would be implicit in the passage. There may be some 2-5 types of things.

Remember these very well. Each point you can remember thru some code word or something. EPS, FLISKKS or whatever/however you feel like. But dont just skim thru those parts. You will find so many of those in each subject, including quants. Write them down somewhere in short form. It helps. We had many questions which were theoretical this way.


5. FSA: The SS8 and SS9 is considered tough. 2 days before the exam I made some notes which helped me.

SS9:

I drew some tree diagrams/flowchart kinda stuff. Like FIFO-> Less COGS-> More Net Income-> Better profitability. Also like DDB-> More depreciation->Less assets->Higher ROA and types.

This helped to understand how everything is linked.
I drew 1-2 tree diagrams for each topic like inventory, capitalizing etc

Also, next part is understanding restatement of financial statements when:

- Converting FIFO between LIFO
- Capitalizng vs expensing
- Operating lease was capital lease etc
- whatever to whatever

They will ask questions like if you change one from another how will it affect:

1. Balance sheet
2. Income statement
3. Cash Flow

Schweser would have given one paragraph which is lengthy while revising and you will forget soon. So, make notes of how they affect with 1-2 lines.

e.g. FIFO to LIFO for COGS (Income statement):

COGS FIFO = COGS LIFO - Change in LIFO reserve

(We got the above equation as a question but worded as a sentence)

It helps. Make such notes for each area in SS9.

SS8:

Same stuff. I/S and B/S may seem more easy when compared to Cash Flow. Please don't leave Cash Flow. Study that. There will be an example in CFAI books. Note down the formulas from that. Its very conceptual to remember too.

Would again re-edit this as and when I get time.