CFA Level 2 Comprehensive Study
Guide + Exam Questions &
Solutions Graded A+
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,FCFF (using EBITDA) - Answer: FCFF = EBIDTA(1-T) + DEP(T) -
Finv - Winv
Converting FIFO to LIFO COGS - Answer: FIFO COGS = LIFO
COGS - (End LIFO Reserve - Beg LIFO reserve)
Engle- Granger Test - Answer: Test whether 2 variables are
cointegrated. Regress 1 data series against the other and
check residuals for unit root.
Steady State of Growth Formula - Answer: growth = Growth
Rate TFP/1-(Labor cost in total factor cost) + labor force
growth
Labor productivity growth accounting Equation (Growth Rate
in Potential GDP) - Answer: Growth rate in potential GDP =
Long-Term growth rate of labor force + Long-term growth rate
in labor productivity
Neoclassical Model - Answer: Because of diminishing
marginal returns to capital, the only way to sustain growth in
,potential GDP per capita is through technological change or
growth in total factor productivity. a steady state rate of
growth and diminishing marginal returns, which are tenets of
neoclassical growth theory.
Real Interest Rate - Answer: real = Nominal - Expected
inflation rate
Period Pension Cost (formula) US GAAP - Answer: Current
Service Cost + Interest cost obligation - Expected Return on
Assets + Plus amortization of past service cost + amortization
actuarial gain/losses
Total Periodic Pension Cost - Answer: Net Change in Liability
of the plan - Employer Contributions or Interest Cost + Service
Cost - Actual return on investments.
Total value to paid (TVPI) - Answer: DPI + RVPI / Paid in
Capital
H-Model - Answer: V0= Do(1+GL) + DoH(gs-gL)/ r- GL
, FCFE using FCFF - Answer: FCFE = FCFF -Interest(1-T) + Net
Borrowing
Value of Long position in a forward contract - Answer: V = St -
Forward Price (1+r)^(T-t)
Synthetic Share (Put-Call Pariy) - Answer: Co=Po + So- X/(1+rf)
Payout ratio - Answer: Payout ratio = 1- b (b= retention ratio)
Justified leading P/E - Answer: 1-b/ r-g
Justified trailing P/E - Answer: 1- b (1 + g)/ r-g Where (1-b) =
Dividend payout ratio, G is LT Growth in Dividends
Standard error of estimate - Answer: (Sse/n-2)^1\2 where Sse
= Sum of squares residual
Guide + Exam Questions &
Solutions Graded A+
Professional Academic Assistance Services
Services Offered
• Proctored Exam Assistance
• Online Class Management (Full Course Support)
• Exam Preparation & Study Materials
• Assignments and Coursework Support
• Essay and Research Paper Writing
• Discussion Posts & Responses
• Editing and Proofreading
• Confidential Academic Consultation
Contact Information
Email:
WhatsApp link: https://wa.me/254704846336
Fast Response | Confidential | Reliable Academic
Support
Helping Students Achieve Academic Excellence
,FCFF (using EBITDA) - Answer: FCFF = EBIDTA(1-T) + DEP(T) -
Finv - Winv
Converting FIFO to LIFO COGS - Answer: FIFO COGS = LIFO
COGS - (End LIFO Reserve - Beg LIFO reserve)
Engle- Granger Test - Answer: Test whether 2 variables are
cointegrated. Regress 1 data series against the other and
check residuals for unit root.
Steady State of Growth Formula - Answer: growth = Growth
Rate TFP/1-(Labor cost in total factor cost) + labor force
growth
Labor productivity growth accounting Equation (Growth Rate
in Potential GDP) - Answer: Growth rate in potential GDP =
Long-Term growth rate of labor force + Long-term growth rate
in labor productivity
Neoclassical Model - Answer: Because of diminishing
marginal returns to capital, the only way to sustain growth in
,potential GDP per capita is through technological change or
growth in total factor productivity. a steady state rate of
growth and diminishing marginal returns, which are tenets of
neoclassical growth theory.
Real Interest Rate - Answer: real = Nominal - Expected
inflation rate
Period Pension Cost (formula) US GAAP - Answer: Current
Service Cost + Interest cost obligation - Expected Return on
Assets + Plus amortization of past service cost + amortization
actuarial gain/losses
Total Periodic Pension Cost - Answer: Net Change in Liability
of the plan - Employer Contributions or Interest Cost + Service
Cost - Actual return on investments.
Total value to paid (TVPI) - Answer: DPI + RVPI / Paid in
Capital
H-Model - Answer: V0= Do(1+GL) + DoH(gs-gL)/ r- GL
, FCFE using FCFF - Answer: FCFE = FCFF -Interest(1-T) + Net
Borrowing
Value of Long position in a forward contract - Answer: V = St -
Forward Price (1+r)^(T-t)
Synthetic Share (Put-Call Pariy) - Answer: Co=Po + So- X/(1+rf)
Payout ratio - Answer: Payout ratio = 1- b (b= retention ratio)
Justified leading P/E - Answer: 1-b/ r-g
Justified trailing P/E - Answer: 1- b (1 + g)/ r-g Where (1-b) =
Dividend payout ratio, G is LT Growth in Dividends
Standard error of estimate - Answer: (Sse/n-2)^1\2 where Sse
= Sum of squares residual
