@padniaki
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AM – Constructed Response
Q# Topic Max Pts <=50% 51%-70% >70%
1 Portfolio Management – Individual 20 – – *
2 Portfolio Management – Individual 15 * – –
3 Portfolio Management – Individual 16 – – *
4 Equity Investments 17 – – *
5 Economics 20 – – *
6 Portfolio Management – Institutional 18 * – –
7 Portfolio Management – Institutional 14 – * –
8 Fixed Income Investments 17 * – –
9 Fixed Income Investments 9 * – –
10 Portfolio Management – Risk Management 18 – * –
11 Portfolio Management – Performance Eval. 16 – * –
PM – Item Set
Q# Topic Max Pts <=50% 51%-70% >70%
– Alternative Investments 36 – – *
– Economics 18 – – *
– Equity Investments 18 – – *
– Ethical & Professional Standards 36 – – *
– Fixed Income Investments 18 – * –
– Portfolio Management 18 – – *
– Portfolio Management – Asset Allocation 18 – – *
– Portfolio Management – Risk Management 18 – – *I ll explain with an example lets assume…
[…]
Please correct me if I am wrong!
I had trouble following the example, so I’ll just try to explain with an example of my own:
Look at the extremes…
If your entire portfolio was in a tax-exempt account, and your investments decline by 20%, your after tax loss is 20%.
If your entire portfolio was in a taxable account, and your investments decline by 20%, your return is HIGHER (potentially) than -20%, because you can reduce the taxes you pay using your losses. Assume a 25% tax rate: -20(1-.25)= -20(.75) = 15%.So, if a larger portion had been in the taxable account, a larger portion would have been subject to the tax “benefit,” increasing return.
NOTE: This situation would be opposite for a portfolio that experiences gains during the year.
(Now someone can please correct me if I’m wrong)
Don’t know the answer to the first question, but for your calculator question: I learned plenty of good info from the actual manual (you know, the boring one that comes with the calculator that no one ever reads?).
http://education.ti.com/guidebooks/financial/baiiplus/BAIIPLUSGuidebook_EN.pdf
@lakshya25: I read through the refresher for L1 and 2. M considering solving all the EOC..within chapter examples for these sections again fron Kaplan..CFAI stuff confuses me even more..Wait, if CFAI stuff is confusing, don’t go back and do Kaplan questions…do the actual CFAI ones. Figure out what it is that’s confusing you in the CFAI stuff by doing the CFAI questions. If a particular question or concept is bugging you, ask about it here.
Additional question related to what I posted above: Does retirement consist of one stage or two? Because in one of the readings it discusses the lifecycle stages (can’t remember the first stage, but the others are accumulation, maintenance, and distribution), in which the latter two both take place in retirement. Maintenance is the majority of retirement (I think) and distribution is when you actually start distributing your net worth. Wouldn’t this be two stages? Or am I reading too much into it?
@Sophie, I just noticed these posts…absolutely outstanding. Just came on here to ask some IPS questions, and your post answered most of them. Seriously, so helpful, to the point, and accurate. Thank you.
With that said, I still do have a question. I seem to be struggling on “time horizon.” My initial understanding was that the stage of the time horizon changes any time there is a significant change in circumstances. For instance, in question 1 in the CFA 2008 AM exam, I put something to the effect of:
“They have a long, multi-stage horizon. The first stage spans from now until their children enter college (in about 14 years), the next stage is while their kids are in college, the third stage is when their kids are out of college and no longer dependent on them, and the final stage is retirement.”
However, the answer given by CFA was simply:
“The Carvalhos have a long-term multi-stage time horizon. In the short term,
they must pay living expenses and provide a home for their family. They
may also have to pay tuition for their children. Their second stage is
retirement, thirty years from now.”How do I know what is significant enough to constitute a stage of the time horizon, other than retirement?
@Sophie is right, you need to time yourself. But there is a better way than equal-weighting the questions, because some (e.g., IPS) are worth way more and should take more time. So, here it is: on the exam, at each question, they give you the amount of minutes that should be allocated to each question. This is the MAXIMUM that you should spend on each question. Aim to finish each question in 70% of the time it gives you.
Do you spend a lot of time thinking about what you’re going to say? Or are you spending all that time writing? Because chances are, you’re writing way too much or getting way too detailed.
Are you kidding @AjFinance? Mechanical pencils, 100%.
You could also look at it this way: you’re probably more likely to get into an ivy league school if you already have the CFA charter.
The CFA charter is most definitely NOT something “anyone can get.” Someone once posted on analystforum the number of CFA charterholders total compared with the number of MBAs given out each year, and it was astonishing. An MBA from an ivy league school is very prestigious, don’t get me wrong…but CFA charterholders are a relatively elite group, numbers-wise.
On that note, what does everybody have planned for that Saturday night/that Sunday? I haven’t really planned anything in the past, but this year I bought tickets to the Yankees v. Red Sox game. As soon as I get out of the exam I’m going to smoke a cigar, then hop on the subway and enjoy the game. Can’t wait!
