Hello All,
Let’s say the stock price at t=0 is $50; growth rate = 10% and discount rate = 8%, then why is it that if I need to find stock price at t=1, I do $50 * (1+g) instead of $50 * (1+r)? I am curious.
Thanks in advance.
Regards,
Allalongthewatchtower
Hi monkeys,
So I am having somewhat of a hard time understanding the concept of money-weighted return, specifically the amounts a different t’s. If I am approaching a question from the view of the portfolio (purchase 1 share is a +100):
At t=0 purchase 1 share for $100
At t=1 purchase another share for $120; Dividend from first share $2 (Total inflows/outflows at t=1 is $118)
Why would a dividend, which I assume is a check from a company not to the account, subtract from the overall account value?
Thanks for the help in advance!
Has any one used analystnotes questions? How close are they to the actual questions?
Hi,
I began my prep a month ago with FRA and I’m just done with it and moved onto Equity&Fixed Income. I am completely relying on CFA prescribed material and preparing from the same. For those of you who followed the same what was the level of difficulty and how similar was it in the december exam when compared to the EOC qstns in CFA official material? Can I continue preparing in the same manner or any extra preparation is required? ‘Cos after reading every chapter I’m able to solve,if not all, most of the EOC problems/qstns. Jus wanted to know your thoughts…
Tia. :)
P.S: If it make any difference, I come from non-finance background. CFA L1 is my first foray into this field
Have any of you tried solving Example 11 of Reading 7 using HP12c Platinum?
I’ve answered both questions 1 and 2 of Example 11 using the HP12c Platinum. I got the answer for question 1 which is a mean of 53, but I got a standard deviation of 98.7145 instead of a 94.51.
I’ve tried solving with excel just to check whether the book is wrong, and it turns out its 94.51 is really the answer.
So I tried inputting and solving for the SD several times in my financial calculator just to make sure I didn’t input the wrong numbers. I still got a 98.7145(And the HP12c’s user guide said that it gives the best estimates of the population standard deviation).
What am I suppose to do with this?
Hello,
Please help me with this question , I am confused with how to use probability for 18th day
A month contains 20 trading days. Which of the following is closest to the probability of the market rising on 18th day of the 20 days? The probability of a rise is 55%
Thanks
I would appreciate it if someone could explain to me how to answer example 13 question #2 of reading 7
And for the test, do we need to memorize table 23(k, its interval around the sample mean, and proportion) of reading 7?
I understand that sample is only a portion of population. However, I have difficulty in identifying when I should use sample standard deviation and population standard deviation. Do you guys have any ideas on how to quickly identify whether the question is asking about a sample or a population?
Is it necessary to memorize all the possible risk- free assets when solving for the Sharpe Ratio?
I’m not sure if I have covered risk- free assets in my reading, but what are risk- free assets?
Is it necessary to memorize the formula of sample skewness and sample excess kurtosis?
Is it possible to easily compute it with a HP12C?
Hello,
I am planning to take cfa exam in june 2015. I have few questions regarding using pencils and calculators. I wanted to collect these informations early, so that I don’t have to worry about these things later.
1. Do I need to take 2 calculators for the exam? If yes, Can use BA II Pro and BA II plus as back up (different models)?
2. Which is best - mechanical pencil or regular?
3. There are different points in #2 pencils (e.g., 0.5mm, 0.7mm, 0.9mm - thin, medium, thick). Which point is recommended?
Thanks for your time on this.
SAy you are given two expected returns for two different assets (Asset 1 and Asset 2). Assume they are equally weighted in a portfolio. Then you receive the actual return of the portfolio as X%. How do you calculate the correlation?
What will happen to balance sheet if a company is incurring loss. I understand that the loss will reduce the retained earnings. But if there are no sufficient retained earnings/no retained earnings at all, how the loss will impact the balance sheet? Loss may have increase in debt on the liability side but how it can be balanced in the asset side? pls clarify.
Hello all.
Just in case I don’t pass (and for future reference) where can I find practice questions that are comparable to what is on the actual test? Besides the practice tests offered and the CFAI books, I can’t seem to find any series of questions that are consistently as tough, or tougher, than the material on the test. For example, I would say that only 20% of the q-bank questions are CFA test tough.
Thanks!
Joplin Corporation reports the following in its year‐end financial statements:
Net income of $43.7 million.
Depreciation expense of $4.2 million.
Increase in accounts receivable of $1.5 million.
Decrease in accounts payable of $2.3 million.
Increase in capital stock of $50 million.
Sold equipment with a book value of $7 million for $15 million after‐tax.
Purchased equipment for $35 million.
Joplin’s free cash flow to the firm (FCFF) is closest to:
A. $16 million.
B. $24 million.
C. $66 million.
The answer :
CFO : 43.7+4.2-8-1.5-2.3=36.1
FCinv=35-15=20
FCFF=36.1-20=16.1
My question is that why the investment in capital stock for 50 was not included as a component of WCiv (CA-CL) when calculating the FCFF ?
What happens if the creditworthiness of the company that has taken a floating rate loan declines int he middle of the loan term? Is the lender allowed to change the terms or stop rolling the loan forward? Or is he stuck in a raw deal?
For a wholly equity-funded firm, what are the consequences of project return not meeting CoE?
- stock price will fall / unhappy investors that’s it? …problems funding future projects..?
Given the following hypothesis:
The null hypothesis is H0 : µ = 5
The alternative is H1 : µ ≠ 5
The mean of a sample of 17 is 7
The population standard deviation is 2.0
What is the calculated z-statistic?
What kind of test is being used for the following hypothesis and what would a z-statistic of 1.68 tell us about a hypothesis with the appropriate test and a level of significance of 5%, respectively?
H0: B ≤ 0
HA: B > 0
A)
One-tailed test; fail to reject the null.
B)
One-tailed test; reject the null.
C)
Two-tailed test; fail to reject the null.
We are given a nonnormal distribution with sample size N=100. We are given a range of dollar figures that a company may spend (0, 100). The expenditures form a continuous uniform random variable. The probability function is a horizontal line with a vertical intercept = 1/100. We are told that all possible outcomes are equally likely for a uniform random variable.
We are told to collect 200 random samples of the expenditures from 100 companies (n=100). In each trial, 100 values for capital expenditure are generated from the uniform distribution (0, 100). For each random sample, we compute the sample mean and conduct 200 simulatipon trials in total. Because we have specified the distribuion generating the samples, we know that the population mean = (0 + 100)/2 = 50.
The population variance = (100-0)^2 / 12 = 833
The population standard deviation = root(833) = 28.87
The standard error = 28.87 / root(100) = 2.887
To save time and space, the range of sample means is:
42.5<X<44
increasing by increments of 1.5 to:
56<X<57.5
The frequency of results is given; it approximates a bell shaped distribution, wth the highest frequencies centered around 48.5<X<50.
So the following are my questions:
I.) we are told that the probability of any expenditure occuring (0, 100) is equally likely. Why does the absolute frequency contain only values between 42.5 and 57.5?
II.) we are told that we have a nonnormal distribution but the sample absolute frequency shows a relative normal (i.e. bell shaped) distribution. I understand that this is the case for large sample sizes N, but how does it work?
III.) If the distribution is nonnormal, how can the population mean be simply the range devided by 2? Doesn’t the non-normal distribution effect the way the mean is calculated?
Thanks!