A must read post before the Level I exam

I was about to create a post comprising of some points to ponder before the level I exam, I came across this post which was received through an email.

here goes the link

http://www.finquiz.com/blog/2012/11/25/exam-day-prep-dos-and-donts-for-the-cfa-exam/

This is a must read post with a lot of things you must be thinking of doing or have been already practising.. Don't forget about your passport, exam ticket, working calculator (with functioning batteries) and of course stationary.

Good Luck and all the best for the exam.

Level I Exam - Some important tips (Part 1)

I heard somewhere that if you rank, the most powerful strength is the strength of faith followed by mental strength and then comes the physical strength. Reminds me of Batman Begins, the first episode of an epic series by Christopher Nolan, a classic example of the power of soul and belief over physical strength. Believing in yourself is very important for passing the exam and the ability to overcome the fear of failing the exam can really make the difference. Referring to an excellent dialogue of the movie that we fall in order to learn how to stand up, if we start thinking about failing the fear ruin the whole situation. The first and foremost thing in this regard is to overcome this fear and remained focused.

I believe a lot of you have appeared in several mocks and you'd have identified your strongest areas. Starting the exam from the strongest area can boost up the confidence and can give you a winning sense.

For me time was never an issue in both level I exam and level II exam. Same is the case for most of  the students but does that mean we should not bother about time management? I certainly doubt that. The exam is balanced in terms of difficulty level so try spending less time on questions which are straight away and try spending more questions which you find tricky.

Starting the exam from the area which you find difficult and think that with fresh mind you may cover that easily could be a winning strategy for a few but it can result drastically as if questions are left undone then while doing the other areas you could have 'evil thoughts' coming about that area.

Stay tuned for other tips they are on their way...

What I was doing in last week before Level I exam?

The perspective is entirely different for those who are appearing first time compared to those who are re taking the exam. Since I appeared only once in the LI exam, the feelings which I had were a mixture of somewhat fear and curiosity. Though I had overcome my fear to a reasonable extent by giving CFAI, Schweser and Finquiz mocks but the curiosity to know the actual exam's difficulty level and the experience of having it was residing. The CFAI text EOC questions were my target in the last week along with going through chapter end summaries from the curriculum. I had already gone through the schweser volumes thrice, once before each mock I gave and the smart summaries provided by finquiz were of great help to me in those 6 days. The confidence which revising gave me was immense and that really made the difference. Candidates should go through end of chapter questions a long with chapter end summaries of the curriculum now and if possible try purchasing the smart summaries of finquiz in order to go through the whole syllabus before the exam. Schweser Secret sauce can also serve the cause and make the difference. If you are planning to go through mocks in these days then try solving them in a 'simulated exam environment' by solving the whole morning section then taking a two hours break and then going through the afternoon session. Level I isn't only about knowing the stuff but also about retaining and recalling it in the exam. Stamina along with accuracy and effectiveness counts and 90 seconds are there for one MCQ.

Good Luck

Getting Enrolled

Let me recall when I had seriously started studying for Level II? This year January I guess... but I was supposed to start in September last year? Of course I did but the element of seriousness was missing! What happened in Jan that made me 'serious'.... well I got enrolled for Level II program in Jan! Does it have any connection? Hell Yeah! For me it is the only connection so far...

Theoretically, according to the schedule which finquiz guys provided me, I should have done by fixed income and equity by now and start with alternative investments but I am way behind the theory. As I have got enrolled in the exam and my books are in the process of being shipped, based upon the analogy I drew, I think I'll start studying now. Particularly it is important in this case as I am not preparing from Schweser, but using the curriculum notes and the CFAI text, for examples and chapter end questions. I would say those who are planning to appear in 2013 and have started their preparations for level III they should get enrolled and not wait for the deadline to come close as CFAI text is necessary for preparations, I think, & biology of belief that since enrolment is done lets start preparing... that inner drive is necessary. It works for me really well.  

How did I use FinQuiz Curriculum Notes?

Particularly I am writing this in response to a recent comment on a post previously published. I used FinQuiz notes as an alternate to the CFAI text. It helped me in multiple ways as the material was much more organized and consisted of highlighted point in the form of bullets. Moreover the structure was more or less of the CFAI text unlike other notes providers as they focus on LOS in spite of covering the whole area. I was able to revise the syllabus multiple times due to the notes due to their comprehensiveness. Another approach in this regard could be to first go through the CFAI text and then utilize the notes. It could be counter productive. Using primarily the curriculum notes and then approaching CFAI text for the areas which Curriculum Notes fail to provide adequate details could be a productive approach.

Doing CFAI text examples along with chapter end questions is a must. Following a schedule while preparing for CFA Exams is inevitable in passing and I can certainly say FinQuiz curriculum notes provide you with an opportunity to follow a schedule, complete studies in time, be organized, consistent and can revise the syllabus multiple times before the exam.

Active vs Passive Management Strategies - Level III

Passive Strategies

• Such strategies assume that market expectations are correct.
• Portfolio is structured in a way to closely track the benchmark index.
• Portfolio manager deploying such strategies accept average risk and return level.

Active Strategies

• Primarily rely on manager's forecasting abilities.
• Returns of the portfolio must increase if manager has superior forecasting skills.

Types of Passive Management Strategies

1. Pure bond indexing/Full replications approach
2. Enhanced indexing by matching primary risk factor
3. Enhanced indexing by small factor mismatches

Types of Active Management Strategies

1. Active management by larger risk factor mismatches
2. Full blown active management

Key Terms - Level III

Usually when the word essay is used, the sketch which strikes the mind is more or less related to something detailed or a kind of a vignette. As per my understanding, so far, the morning section of Level III demands, to a considerable extent, the structured response which may comprise of terminologies which must be remembered. As I am in the initial phases of my preparation and going through fixed income section which has a fancy name in Level III as its associated with portfolio management, I am gradually realizing the importance of remembering they key terms. I mean we could have questions in which our desired response should only be those terms! For majority remembering and cramming the terms in late Feb or in start of March 2013 might be a suitable strategy but considering how I used to prepare in LI and LII - gradually, I think I should try to remember their names and try to connect them with the concepts to get comfortable with them.

Good Luck!

Level II vs Level III - A talk with a Charterholder

As always he was kind, comprehensive and very much calculated in each and every word coming out of him. The basic difference he cited in preparing for level II and level III was the portfolio perspective. Level II was much more of a hardcore stuff dealing with mechanics and tools while Level III was kind of managerial in which the everything is considered in relation to the broader picture - The Portfolio. Apart from the other details like old examination questions are available for LIII, the exam does not only comprise of item sets but essay or rather structured response, according to him, was an addition distinct to Level III another major difference is the historic pass rate for LIII. Probably the 70% distinction does not apply here and there is a good chance for students to pass scoring < 70%. Though MPS is never disclosed but generally its an understanding that scoring above 70% is considered to be Pass for Level I & Level II. I can recall while preparing for Level I & II, I used to put myself into the stuff & mostly tried to think from examiner's perspective so that I could cover all the aspects which I potentially find testable. Focusing on Portfolio Perspective and acting like making judgements from the question according to the scenario painted could better help in passing the exam. And I think I must do it from the beginning. Reading 23 is almost done I hope by next week 2 more readings will be covered. Stay tuned!

Lets See what CFA Institute has to say about Level III Essay Questions

My preparations for Level III have 'officially' started from 25th of this month and waow its hard to believe I am preparing for the final level! Last year when I looked at the item sets... they freaked me out ALOT. I hope Essays which are distinct to Level III do not rip me a** apart. Level III essay exam is tested in the morning. Usually 10 - 15 questions are tested in the exam with multiple parts and each question & part's points are given in the exam accumulating to max 180 points. Each essay question consists of one or more parts. Some parts direct the student to write the answer in a template. Instructions in bold print immediately following the question direct the candidate to the page number of each template. 

Source: http://www.cfainstitute.org/cfaprogram/exams/format/Pages/cfa_exam_question_formats.aspx

The Website further shared interesting information

·         The published guideline answers on past essay exams are more complete and better written than actual exam answers that receive full credit.

·         The published guideline answers may not reflect all alternative approaches to the question that received full or partial credit.

·         Answers are graded only on content. They are not graded for language and style. (pretty important and a point certainly I need to focus well)

·         Use short phrases and bullet points to save time, but be sure your meaning is clear. (tough job to remain comprehensive)

·         Handwriting is rarely so poor that the answer cannot be graded. (Whoops! Let me recall when I had solved the last exam with hand??? Probably 2 years!"

·         Points are awarded for direct answers to a question.

·         No points are awarded for general knowledge that is not responsive to the question. (Another area to focus on)

·         Do not spend too much time writing an answer. This is particularly tempting when you know the topic well. Formulate a direct response to the command words, and use the amount of time allotted. (Another weak point!)

·         You should expect to encounter questions that you will not be able to answer correctly. There is a great deal of material to master and exam questions are challenging. Standard setters and the Board of Governors (at all three levels) take account of exam difficulty in setting Minimum Passing Scores. 

Source: http://www.cfainstitute.org/cfaprogram/exams/format/Pages/cfa_exam_question_formats.aspx

And Some common reasons why candidates get poor grades!

·         Not responsive to command word list (list, define, etc.)

·         Answered a question they wish they had been asked instead of the question that was asked.

·         No work shown on a calculation question and the answer is incorrect.

·         Hedged on questions that asked for a recommendation and justification (e.g., recommended A, but justified B).

·         Neglected to answer part of the question (especially if a several part question). Note that you can still answer part E, even if you do not know the answer to part D.

·         Content area experts spent too much time on their area of expertise, leaving too little time for weak areas.

·         Providing more items or responses than requested. If a question asks for three factors, only the first three that you list will be graded.

Source: http://www.cfainstitute.org/cfaprogram/exams/format/Pages/cfa_exam_question_formats.aspx

For Further details on Level III Essay questions visit:

http://www.cfainstitute.org/cfaprogram/exams/format/Pages/level_iii_essay_question_details.aspx

The Broader Picture vs Details

Throughout my preparation for Level II, I was of the impression that it is totally different than Level I in terms of understanding, depth and testing. After going through the exam I realized LII is different in terms of understanding and depth but in a lot of areas I had found the testing to be more or less on the same path. I don't know how true I am in exclaiming this but this is exactly my impression. Understanding the broader picture is undoubtedly necessary but it is also deceiving in terms of exams point of view. For instance I spent a lot of time in understanding and solving fairly detailed examples forgetting that an MCQ has three options and we have around 3 minutes to solve it. Steps which are involved in broader applications need to be understand fairly and can be tested in the exam. Like in translating the whole Financial Statements in Multi National Operations using Temporal or All current method several steps were involved. Considering the examples provided in the chapter I went through the whole process but lately I realized that the whole situation is less likely to be tested as compared to individual steps like how to translate revenues, COGS etc. or how using one method is different that other in terms of ratio analysis and so on. Trying to grasp the whole topic may lead one, as what happened with me initially, not to remember and recall individual steps which have the potential to be tested. I am not stating to let go off the broader picture and cram the steps but understanding as well as making ourselves comfortable with details is important. Thanks to curriculum notes I used, had separated the details and highlighted them in boxes which could be digested easily. Precisely talking about the exam it is very important to stay focused on details and steps which could be tested along with proper understanding of the topics particularly in all major areas.