Scipio_Academy

Scipio_Academy

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  • Avatar of Scipio_AcademyScipio_Academy
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      • CFA Level 2
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      6
      ::

      A deferred tax
      asset (DTA) and a deferred tax liability (DTL) are derived from differences in
      taxes payable and the amount of tax expense recognized on the income statement.
      DTA & DTL represent an amount of income tax expense that a company will receive
      credit for, or be liable for in the future. Increases (decreases) in tax rates
      will increase (decrease) DTA and DTL. Tax rates dictate the amount of deferred
      taxes to be recorded because it determines the amount of taxes to be paid. 

      Formula

      Income Tax Expense = taxes payable + Change in DTL – Change in DTA

      Increases
      (decreases) to DTL will result in higher (lower) income tax expense. Increases
      (decreases) to DTA will result in lower (higher) income tax expense.

      Avatar of Scipio_AcademyScipio_Academy
      Participant
        • CFA Level 2
        Up
        5
        ::

        In this case, you should not think about this as “aggregate demand”, which is a macro-econ concept. In this case, the firm faces a horizontal demand curve because demand for a homogenous product (perfect competition) is perfectly elastic. The consumer will completely abandon Firm A for Firm B if Firm A raises their price. If Firm A keeps its price at market levels, they will be able to sell all quantity produced. The demand curve facing the market is still downward sloping because of the law of demand for a normal good. As price declines, quantity demanded for that good increases.

        Avatar of Scipio_AcademyScipio_Academy
        Participant
          • CFA Level 2
          Up
          2
          ::
          Below are the weights of each topic in percentages.

          Topic
          Area

          Level 1 Level 2
          Ethical and Professional Standards
          15
          10-15
          Quantitative  Methods
          12
          5-10
          Economics
          10
          5-10
          Financial Reporting and Analysis
          20
          15-20
          Corporate Finance
          7
          5-15
          Equity Investments
          10
          15-25
          Fixed Income
          10
          10-20
          Derivatives
          5
          5-15
          Alternative Investments
          4
          5-10
          Portfolio Management and Wealth Planning
          7
          5-10

          https://www.cfainstitute.org/programs/cfaprogram/exams/Pages/exam_topic_area_weights.aspx

          To answer your question, I would say that it’s not a good idea to plan to skip any sections, as you have stated in your follow-up comment. Focusing on your strengths is a key factor to moving through the exam at a steady pace. What you may find is that as you focus on your strengths you will be able to answer questions in those sections a lot easier giving you more time to spend on the topic areas that are more difficult.

          You may consider making a strategy where you take your strongest sections first, which would cause some jumping around, and then working towards your weaker areas. According to the recent weightings of topic areas its possible that Portfolio Management will become more important when you take Level 2.

          I hope this was helpful!

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