CFA Level II Mnemonics

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Batman1

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Hi All -
What are your mnemonics / quirks to remember unmemorable topics in the exam.
I only have some for QM so far:
Serial Correlation, Durbin Watson, Hansen - Some Cats Drink Water Happily
Heteroskedaskity, Breusch Pagan, Chi, White - Happy Boys Play Cards Well
Multicollinearity, Sig Fs, non sig Ts - MotherF’ing Tests
 
Normally I like to picture models/formulae in terms of tables and diagrams. I also use mnemonics though.
Vivisection > Vmerger=Va+Vt+S-C
Icebrew > IR=IC x sqrtBR
Second > CF=(S-C-D)(1-t)+D
Coke=pepsi > c+ke=p+s
 
DIP is to capitalise interest cost: NI + Depreciation + Interest - lease Payment
I think I stole this from someone on AF in previous years.
 
Olinto had a pretty funny one for remembering the US GAAP requirement for recording a finance (capital) lease:
S N O T
S - Seventy Five percent of asset’s useful life
N - Ninety percent of the fair value of the leased asset (PV of lease payments)
O - Option to purchase at a bargain price
T - Transfer ownership at end of lease term
 
I wish I had something to contribute to this threads awesomeness but thanks !
 
If I can’t think of something caustic, I shurg and learn the actual material:
  • Serious Doobies, Watson
  • Little girl, “Hi, Gamma”. Grandma, “Dear, you’re at the money!”
  • The tragic tale of the socially repressed put writer, “PLEASE DON’T CALL!”
  • Wear a Call Cap. Put [something] on the Floor.
  • Convenience Yield = you have a cow. You hate it. It’s an indoor cow that sits everywhere in your house. Tragically, Exploding Cow syndrome strikes all the outdoor cows. You feel pleased at possessing a physical cow rather than a contract for a cow (that is likely now exploded).
 
Porters 5 Forces:
Every Surfer Blazes Something Real
Entrants, Substitutes, Buyers, Suppliers, Rivals
 
Foreign Exchange Arbitrage:
Up the beat Mixtape - Up the bid Multiply / down the offer divide
P.S: I don’t know if that counts :D
 
CDS initial payment:
(Swap rate - Coupon rate) x (Duration) x (Principle)
Southern / California / Double / Penetration
 
Fine, once when you reach the charter and given learnt synonymous, try to avoid such presenting to clients and expect that they will understand you.
Personally, I am not sure that I had ever been able to learn any knowledge studying in this manner but that’s only my opinion:)
 
Post offer defense mechanisms = A colorful and leveraged jewel
(color=white knght, white squire, greenmail, leveraged=leveraged buyout & recapitalization and jewel=crown jewel defense)
 
For pension accounting
Change in plan assets (Ending - Beginning) = Charlie Ain’t Bad = Contributions + Actual Returns - Benefits Paid
Change in PBO (Ending - Beginning) = Susan Is Pretty At Best = Service Cost + Interest Cost + Past Service Cost +/- Actuarial Loss/Gain - Benefits Paid
 
Here are some FCFF/FCFE reminders that I found online. I fixed a mistake and added some own tricks:
1. FCFF includes (-)Int(1-t) and FCFE includes (+)Net Borrowing.
FCFE = FCFF - Int(1-t) + Net Borrowing
2. Remember NI has another N (NCC) included. Note 5 terms in each and note that both Int(1-t) and Net Borrowing are respectively positive.
FCFF = NI + NCC + Int(1-t) - FCInv - WCInv
FCFE = NI + NCC + Net Borrowing - FCInv - WCInv
3. EBIT has 4 letters so there are 4 terms. Remember you can only get FCFF from EBIT & EBITDA
FCFF = EBIT(1-t) + Dep - FCInv - WCInv
FCFF = EBITDA(1-t) + Dep(t) - FCInv - WCInv
4. CFO has 3 letters so there are 3 terms. There’s an ‘F’ in CFO so remember it has (-)FCInv in the formula.. Again, note that Int(1-t) and Net Borrowing are respectively positive.
CFO = FCFF + Int(1-t) - FCInv
CFO = FCFE + Net Borrowing - FCInv
5. FCFE discounting using target debt ratio (DR) has all negative components in the formula.
FCFE = NI - [(1 - DR) x (FCInv - Dep)] - [(1 - DR) x WCInv]
 
Heteroskdaticity- think of pee coming out of the tip as the errors. errors increase in variance, just like pee has a lot of varience where it lands in the toilet. Test with Breusch Pagan- Butt Pee. Correct with White standard errors- jizz is also white.
 
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