Greetings of the day to all you CFA aspirants! In this blog, you will find a list of questions and answers based on different study topics from #CFA.
Questions and doubts are aplenty. So, if you don’t have the answers, then you’ve come to the right place! Here, you will find a list of questions along with the relevant answers. So if you have any doubts, find your answers right here! These answers, found so easily, have aided my prep enormously. So if you go through it as well, it will help you too.
Here is a summary of what has been discussed in this post:
Raj holds a 5-year bond that pays a fixed coupon of 8%. Raj feels that interest rates will rise for the next 3 years and hence he wants to hedge his investments in bonds. The best way to hedge is: a. Buy a Future contract. b. Buy an Option c. Enter into a swap.
Answer is mentioned as C.
Shouldn’t the answer be B? How is he hedged in case of C? Earn fixed (he is already earning fixed). If you enter into a swap, how do you nullify your position so that you earn a fixed rate of 8%? Did I understand the question correctly? If fixed was to be earned, why hedge in the first place? Fixed is going to be earned anyhow.
Here Raj is getting fixed coupon payments and he needs to enter into a swap agreement, where he will receive market rate and pay only 8% coupon payments.
For the question below, wouldn’t the reduction in debt be accounted for in "financing activities section? Thanks for looking into this!
Company is involved in an exchange of debt for equity. In which of the following sections of the CF statement would Maritza record this transaction?
A) "Footnotes to the CF statement."
Yes, it is not included in company cash flow statement because here actual cash is not moving in or out from company. You can mention it in the footnotes.
I have already completed studying for all study sessions, and have begun with the exam simulations. I will be taking Level 1 in December. Should I take a mock test dated from 2008-2013, or just from 2012-2013. I have heard that there is a constant update to the subject every year. So I don’t want to test myself on things that are not going to be tested during the CFA Exam.
Any help would be appreciated.
Do the current mocks only.
If you are to go back, you will need to solve questions that are not in the syllabus.
Would someone be generous enough to help regarding the following questions? Many thanks!
– Is tax loss carry forward going to be an amount to deduct from "pretax income" or "taxable income"?
– Based on my understanding, if the accounting standards adopt a fast depreciation of assets, the carrying value is lower than the tax base. That means higher depreciation expenses have been released to the income statement, and resulting in lower net income, and thus, lower income tax expenses than tax payable, in previous years. That means I have paid more than I am supposed to because the income statement reveals my true tax responsibilities. That’s why the tax expense should be higher in future years, although the actual tax payment (tax payable settled) has already been performed. Am I getting this right?
It is Taxable income, and you can carry forward net losses to the upcoming years for the tax purposes.
If you think that you still have further doubts, all you have to do is post your questions on the EduPristine forum.