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CFA Level 2 Exam Questions and Answers (Graded A+) $14.49   Add to cart

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CFA Level 2 Exam Questions and Answers (Graded A+)

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CFA Level 2 Exam Questions and Answers (Graded A+) 2nd the cross-rate bids (offers) posted by a dealer must be lower (higher) than the implied cross-rate offers (bids) available in the interbank market. Recall that given exchange rate quotes for the currency pairs A/B and C/B, we can back out th...

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  • March 1, 2024
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CFA Level 2 Exam Questions and
Answers (Graded A+)
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

F statistic - 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 - Answer-Port var = var((1- p))/ n +p) p=correlation

Post offer defeneses - Answer-Leveraged recapitalization, green mail

Pre offer defenese - Answer-Supermajority voting provision, poison puts, fair price
amendments, restricted voting rights, poison pills , staggerd board elections

Post merger value of firm - Answer-V= Va + Vt + Synergies - Cash

Hhi merger index - Answer-(% x 100)^2+ (%x 100)^2
Post merger between 1000 and 1800 moderately concentrated interests, change
greater 100 challenge

Forward contract formula - Answer-Fpt- FP(contract size)/ (1+r(days/360)

FX Forward Premium Equation - Answer-Sp/b [(Actual/360)/1+Ib(Acutal/360)](ip-ib)

Triangular Arbitrage Conditions - Answer-1st the bid shown by a dealer in the interbank
market cannot be higher than the current interbank offer, and the offer shown by a
dealer cannot be lower than the current interbank bid. If the bid-offer quotes shown by a
dealer are inconsistent with the interbank market quotes, other market participants will
buy from the cheaper source and sell to the more expensive source.

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