CFA Level 2 -Complete Exam Study
Guide with Verified Answers |
Guaranteed A+
FCFF (using EBITDA) ------- ✔ CORRECT ANSWER ✓✓FCFF = EBIDTA(1-T) + DEP(T) - Finv - Winv
Converting FIFO to LIFO COGS ------- ✔ CORRECT ANSWER ✓✓FIFO COGS = LIFO COGS - (End
LIFO Reserve - Beg LIFO reserve)
Engle- Granger Test ------- ✔ CORRECT 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 ------- ✔ CORRECT 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) ------- ✔
CORRECT ANSWER ✓✓Growth rate in potential GDP = Long-Term growth rate of labor force +
Long-term growth rate in labor productivity
Neoclassical Model ------- ✔ CORRECT 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 ------- ✔ CORRECT ANSWER ✓✓real = Nominal - Expected inflation rate
, Period Pension Cost (formula) US GAAP ------- ✔ CORRECT 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 ------- ✔ CORRECT ANSWER ✓✓Net Change in Liability of the plan -
Employer Contributions or Interest Cost + Service Cost - Actual return on investments.
Total value to paid (TVPI) ------- ✔ CORRECT ANSWER ✓✓DPI + RVPI / Paid in Capital
H-Model ------- ✔ CORRECT ANSWER ✓✓V0= Do(1+GL) + DoH(gs-gL)/ r- GL
FCFE using FCFF ------- ✔ CORRECT ANSWER ✓✓FCFE = FCFF -Interest(1-T) + Net Borrowing
Value of Long position in a forward contract ------- ✔ CORRECT ANSWER ✓✓V = St - Forward
Price (1+r)^(T-t)
Synthetic Share (Put-Call Pariy) ------- ✔ CORRECT ANSWER ✓✓Co=Po + So- X/(1+rf)
Payout ratio ------- ✔ CORRECT ANSWER ✓✓Payout ratio = 1- b (b= retention ratio)
Justified leading P/E ------- ✔ CORRECT ANSWER ✓✓1-b/ r-g
Justified trailing P/E ------- ✔ CORRECT ANSWER ✓✓1- b (1 + g)/ r-g Where (1-b) = Dividend
payout ratio, G is LT Growth in Dividends
Standard error of estimate ------- ✔ CORRECT ANSWER ✓✓(Sse/n-2)^1\2 where Sse = Sum of
squares residual
, F statistic ------- ✔ CORRECT ANSWER ✓✓Msr/mse = RSS/k /SSE/n-(k+1)
MSR = mean regression sum of squares
MSE = mean squared error, SSE/(n - k + 1)
RSS = regression sum of squares; the amount of variation in Y explained by the model
SSE = sum of squared error from the regression model
k = the number of regressors in the model
n = the number of observations
Portfolio standard deviation of return ------- ✔ CORRECT ANSWER ✓✓Port var = var((1- p))/ n
+p) p=correlation
Post offer defeneses ------- ✔ CORRECT ANSWER ✓✓Leveraged recapitalization, green mail
Pre offer defenese ------- ✔ CORRECT ANSWER ✓✓Supermajority voting provision, poison puts,
fair price amendments, restricted voting rights, poison pills , staggerd board elections
Post merger value of firm ------- ✔ CORRECT ANSWER ✓✓V= Va + Vt + Synergies - Cash
Hhi merger index ------- ✔ CORRECT ANSWER ✓✓(% x 100)^2+ (%x 100)^2
Guide with Verified Answers |
Guaranteed A+
FCFF (using EBITDA) ------- ✔ CORRECT ANSWER ✓✓FCFF = EBIDTA(1-T) + DEP(T) - Finv - Winv
Converting FIFO to LIFO COGS ------- ✔ CORRECT ANSWER ✓✓FIFO COGS = LIFO COGS - (End
LIFO Reserve - Beg LIFO reserve)
Engle- Granger Test ------- ✔ CORRECT 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 ------- ✔ CORRECT 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) ------- ✔
CORRECT ANSWER ✓✓Growth rate in potential GDP = Long-Term growth rate of labor force +
Long-term growth rate in labor productivity
Neoclassical Model ------- ✔ CORRECT 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 ------- ✔ CORRECT ANSWER ✓✓real = Nominal - Expected inflation rate
, Period Pension Cost (formula) US GAAP ------- ✔ CORRECT 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 ------- ✔ CORRECT ANSWER ✓✓Net Change in Liability of the plan -
Employer Contributions or Interest Cost + Service Cost - Actual return on investments.
Total value to paid (TVPI) ------- ✔ CORRECT ANSWER ✓✓DPI + RVPI / Paid in Capital
H-Model ------- ✔ CORRECT ANSWER ✓✓V0= Do(1+GL) + DoH(gs-gL)/ r- GL
FCFE using FCFF ------- ✔ CORRECT ANSWER ✓✓FCFE = FCFF -Interest(1-T) + Net Borrowing
Value of Long position in a forward contract ------- ✔ CORRECT ANSWER ✓✓V = St - Forward
Price (1+r)^(T-t)
Synthetic Share (Put-Call Pariy) ------- ✔ CORRECT ANSWER ✓✓Co=Po + So- X/(1+rf)
Payout ratio ------- ✔ CORRECT ANSWER ✓✓Payout ratio = 1- b (b= retention ratio)
Justified leading P/E ------- ✔ CORRECT ANSWER ✓✓1-b/ r-g
Justified trailing P/E ------- ✔ CORRECT ANSWER ✓✓1- b (1 + g)/ r-g Where (1-b) = Dividend
payout ratio, G is LT Growth in Dividends
Standard error of estimate ------- ✔ CORRECT ANSWER ✓✓(Sse/n-2)^1\2 where Sse = Sum of
squares residual
, F statistic ------- ✔ CORRECT ANSWER ✓✓Msr/mse = RSS/k /SSE/n-(k+1)
MSR = mean regression sum of squares
MSE = mean squared error, SSE/(n - k + 1)
RSS = regression sum of squares; the amount of variation in Y explained by the model
SSE = sum of squared error from the regression model
k = the number of regressors in the model
n = the number of observations
Portfolio standard deviation of return ------- ✔ CORRECT ANSWER ✓✓Port var = var((1- p))/ n
+p) p=correlation
Post offer defeneses ------- ✔ CORRECT ANSWER ✓✓Leveraged recapitalization, green mail
Pre offer defenese ------- ✔ CORRECT ANSWER ✓✓Supermajority voting provision, poison puts,
fair price amendments, restricted voting rights, poison pills , staggerd board elections
Post merger value of firm ------- ✔ CORRECT ANSWER ✓✓V= Va + Vt + Synergies - Cash
Hhi merger index ------- ✔ CORRECT ANSWER ✓✓(% x 100)^2+ (%x 100)^2
