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CFA Level II Topic Picks

ZeeZee London - UKPosts: 1,528 Jr Partner
edited January 2014 in CFA Level II
This is an evolving post of useful CFA topics discussions for Level II. As new and awesome discussions are created, I will be continually adding them here to create a quick reference guide for Level II members to dive straight in!
Topic AreaTopicDescription
General360 Days vs 365 Days@vincentt wonders when do we use one over the other for calculations.
GeneralHow Long is a Vignette?Level II introduces you to vignette-style questions. How do you approach them? @vincentt finds out.
GeneralIs Level 1 testable in Level 2?@fabian wonders if ghosts of Level 1 will haunt him in Level 2.
GeneralLevel II CFA Topic Weighting@shantala goes through the topic weighting information and @christine weighs in too.
Alt InvestmentsPE Financing - Valuing Multiple Financing RoundsEasily confused by multiple financing rounds? @vincentt clears the confusion.
Alt InvestmentsPrivate Real Estate - Cost Approach (why no adjustment?)@Alta12 goes through a real estate question.
Corp FinanceGreenmail - Why Does It Make Sense?@fabian wonders how does greenmail actually work, and we dive into a real-life example.
Corp FinanceSalvage value and TNOCF@Alta12 questions why salvage value of old equipment was not taken into account in TNOCF.
Corp FinanceShares vs. Cash offer in M&A@Alta12 discusses the value of shares post acquisition between a cash and a share offer.
Derivatives[Currency Swaps] What is the standard mark-to-market period?@vincentt wonders if there is a standard mark to market, and what is it.
DerivativesBuying a forward rate@vincentt recaps on what 'buying a forward rate' really means.
DerivativesConfused with putable bond OAS vs option free bond@Alta12 goes through the differences.
DerivativesCurrency Swaps@ryshi walks through the process of a currency swap.
DerivativesEquity Swap Valuations@Diya discusses a Level II Equity Swap question.
DerivativesHedging via Futures Contracts@vincentt discusses an example question with futures contract hedging and how it affects income reporting.
DerivativesHELP PLEASE....... Currency Brain ache@cs_1988 goes through a FX rate question.
DerivativesOption Arbitrage Pricing@Alta12 wonders when a put option is overpriced in the market, why do you sell the put and SELL shares?
DerivativesPut-Call Parity for Forwards - help please@MM12 investigates put-call parity for forwards.
DerivativesQuestion: OASs and all that stuff@vincentt runs through a question about OAS.
DerivativesTheta in a option.@vincentt asks 'why would a deeply-in-the-money call/put option losses its value as time theta is reaching 0?'
DerivativesUnderstanding and Valuing FRAs@fabian clarifies the unique notation of FRAs and discusses clear methods of valuation.
EconomicsA doubt in economics (FX markets) - L2@Knath87 clears the air on FX relationships between countries.
EconomicsCapital Deepening?@vincentt asks 'What's the formula for capital deepening?'
EconomicsConfusing Mundell-Fleming Model@vincentt investigates the Mundell Fleming model.
EconomicsDornbusch Overshooting ModelWhat is it? @Franz finds out.
EconomicsFX Rates Arbitrage Calculations@vincentt learns an easy rule of thumb to figure these questions out.
EconomicsThe International Parity Relationship Combined@diya wonders - how does all the currency relationships combine and what do they mean?
EquityAdjusted CFO@vincentt discusses after tax interest expense adjustments to cash flow calculations.
EquityCapitalizing Interest Expenses@vincentt discusses capitalized interest expenses, and how to treat cash flows for capitalized expenses in reporting.
EquityDeferred Taxes in FCFF@vincentt investigates how deferred taxes are treated in FCFF calculations.
EquityFactors Affecting FCFF@vincentt reviews how various income statement items can affect Free Cash Flow to the Firm.
EquityFCFE Valuation@Dollarstodonuts asks about the various FCFE formulae.
EquityHistorical and Actual Equity Risk Premium@ykilstein investigates the differences between historical and actual equity risk premium.
EquityJustified Trailing and Leading P/E@diya explores the role of P/E comparables method in company valuation.
EquityShare Repurchase Impact on Financial Leverage@STP looks at share repurchases and its effect on a company's leverage.
EquityTerminal Value for a Multistage Residual Income Model@Vincentt wonders why there are no specific terminal value number in the multistage residual income model.
Fixed IncomeAsset Backed Sector of the Bond Market@diya asks - why do asset-backed securities generally require overcollateralization compared to mortgage-backed securities?
Fixed IncomeCovered Interest Rate Parity Question@GraemeA goes through a covered interest rate parity question.
Fixed IncomeHow to Calculate Cash Flow Yield from an MBS@vincentt finds out how to properly calculate monthly cash flow yields from MBS instruments, and how to treat future value and payments.
Fixed IncomeInterest Rate effect I.O. & P.O.For principle-only and interest-only MBS, why do they have +ve and -ve durations respectively? @ykilstein finds out.
Fixed IncomeNotching & Structural Subordination@Diya dives deeper into the concepts of notching and structural subordination.
Fixed IncomeOption Adjusted Spread@alta12 discovers how tricky the questions can get as option added spread isn't a method itself. Not the option adjusted spread we know!
Fixed IncomePassthrough vs PaythroughThey seem to be used interchangably, but @vincentt wonders if there is a difference...
Fixed IncomeReal, Nominal and Inflation Rates - Add or Multiply?@vincentt wonders whether to add or multiply real and inflation rates to get the nominal interest rate.
Fixed IncomeUnder what circumstances would the effective collar of PAC tranches widen?@E92M3 looks at PAC tranches.
FRAAre "purchases" Under Balance Sheet or Income Statement?@vincentt thinks about COGS and Inventory in financial reporting.
FRACalculation for change in working capital investment@Shantala walks through the calculations involved for a change in working capital investment.
FRAFRA - Integration of Financial Statement Analysis Techniques (Reading 24 p403) - EOC Q19@Alta12 wonders why net income is used in the P/E denominator rather than earnings before tax.
FRAImpairment Effects on the Income Statement@tim investigates what are the full effects of impairment on the income statement and future revenue.
FRAIntercorporate Investments Cheat Sheet@shantala wants to get all intercorporate investment treatments sorted out, and @christine answers.
FRALIFO and Cash Flow@diya goes through the relationships between LIFO/FIFO accounting and cash flow.
FRARestricted vs Unrestricted Subsidiaries@vincentt investigates what are these subsidiaries and how they are determined.
FRAROE/ROA after asset impairments@Spiteri87 looks at the effects of asset impairments on ROE and ROA.
FRATemporal Method@vincentt goes through in detail what FX rates apply to which items in the income statement.
Portfolio MgmtTreynor Black Model: Leveraging Funds@vincentt finds out why leveraging to increase returns does not necessarily impact portfolio composition.
Portfolio MgmtTreynor-Black - to Memorize or not to Memorize?@ykilstein wonders as the LOS and sample questions seem to contradict...
Homer: He might have all the money in the world, but there’s one thing he can’t buy. Marge: What’s that? Homer: .......A dinosaur The Simpsons


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