Official CFAI Study Tips link

maimassa

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In case you've been too busy studying and missed them, CFAI has posted some very useful and surprisingly detailed Tips for Studying for the CFA� Examinations on their website:

http://www.cfainstitute.org/cfaprogram/pdf/StudyandTestingTips.pdf

Of most use to Level I are these sections on Item Stems and Distracters (the official term for the carefully chosen wrong answers):

________________________________________________________________

Item Stems:

The Level I CFA examination does not use EXCEPT, TRUE, or FALSE in item stems and
avoids the use of NOT in item stems whenever possible.

When appropriate, stems will include one of the following qualifiers: most likely, least likely, best described, most appropriate, most accurate, least appropriate, least accurate.

Each stem supports only one item on the examination.

Distracters:

The Level I CFA examination does not use any of the following distracters:
all of the above, none of the above, I and II only, II and III only, cannot determine,
cannot calculate, not enough information to determine

Distracters consisting of words or sentences are typically ordered from shortest to longest; distracters that are quantitative are ordered from the smallest number to largest number. The distracters agree grammatically with the stem; language common to all distracters is placed in the stem.

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I'm preparing for Level 3 now. My advice for Level 1 is to expect many questions that use the two column distracter format highlighted on pages 5 and 6 of the Study Tips. CFAI says they use it 'extensively' (p.5 above) and they're not kidding. My head was spinning after the morning session - I felt I'd answered 180 questions, not 120, because of so many two column questions, particularly in FSA. Afternoon session went better because by then I was somewhat familiar with the format.

Even the easiest questions look more difficult if you are needlessly stressed through fear of the unknown. If you can enter the morning session and not be surprised by the question format, you'll have a tremendous starting advantage over other candidates. Your stress level will drop, you will think more clearly, and you'll probably correctly answer more of the marginal questions that are the difference between success and failure at this level (sorry for using the F word).

To use the CFA Institute's own words, "Many sample exams produced by third parties do not follow these conventions, so you should review the CFA Institute format presented here." They are absolutely right. I wasted so much time on third party questions that were made needlessly difficult because they kept using a 'I and II only, II and III only' type format that you won't find in the exam. Everything CFAI says above is what you'll find in the Level I exam, like numerical answers being listed from smallest to largest. Be aware of these small details because you'll have to guess some of the answers on exam day. CFAI even addresses this topic on page 8 and 9 of their Study Tips.

The Level 1 exam rewards those who know the material. If you half know the question topic, you'll get half the question right and the other half wrong - net result 0 points for that question. You need to pick up the spare if you strike the first half of the question. Focus on understanding the core concepts behind every practice question you answer. That way you can better reason out the two answers needed to get full credit on the many paired questions in the Level 1 exam.

All you have to do is pass, and you can do that with less than 70%. If CFAI says 70 is a 'very good' score, then what is a 'good' passing score? Much less than you think when you're aiming for 90 on those practice exams at home. Stay positive and whatever you do, make sure to sit the exam, even if you think you're not prepared and sure to fail. Everyone starts to feel that way as exam day approaches. I did too - but passed.

Good luck to all on exam day
 
Thanks for the long post, it's been really helpful and I think I speak for many of us here in saying we really appreciate you taking the time to impart your wisdom here.
 
That is SO good to know. Thanks for taking the time and best of luck on your Level III exam!!!
 
what's the answer to the only sample question in the tips? (take-or-pay contracts)



Edited 1 time(s). Last edit at Tuesday, April 18, 2006 at 10:11PM by wxyz.
 
B is the answer to the only sample question in the tips? (take-or-pay contracts).adjustment for take or pay contract is added to asset and liabilities. since no effect on income statment, and equity, ROA decreases with adjustment, no change in ROE and interest coverage ratio.
only debt to equity increases with the adjustment
 
you said ROA decrease, and no changed ROE.
but I'm think ROA and ROE should be changed in the same direction, both increase or both decrease, therfore A and D will be excluded, since only one answer.

And C will not be answer (interest).

Therefore left B. But i'm still confused, why debt-to-equity increased?
 
take or pay contract creates long term asset and long term liability. equity is unaffected. no effect on income statement.so ROA(EBIT/Total assets) decrease and ROE(NI/Equity) remains unchanged.
since debt increases and no change in equity , so debt to equity ratio increases.
 
thanks. I thought "take or pay" got PAID, therefore EBIT or NI increased.
 
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