QUANTITATIVE ANALYSIS QUIZZER

Another important part of the CFA Exam is the Quantitative Analysis. So get your pencils and calculators and rack that brain of yours!

To get the answer key kindly leave a comment so I can send to you the answer key.

1. The future value of $100 invested at 6% for 4 years is:

A. $126.25
B. $79.00
C. $124.79
D. $116.32

2. The present value of $200 to be received 10 years from today, assuming an opportunity cost of 10%, is:

A. $50.79
C. $518.00
B. $200.43
D. $77.11

3. A $100 savings bond with a maturity of 25 years can be purchased for $29.50. Assuming annual compounding, what is the rate of return on the bond?

A. 5%
B. 6%
C. 7%
D. 8%

4. What is the value in five years of $100 invested today at an interest rate of 8 percent per year compounded quarterly?

A. $144.50
B. $144.00
C. $147.75
D. $148.59

5. Tom is saving $1,000 a quarter for the next 4 years. Assuming an annual interest rate of 12% compounded quarterly, how much money will he have at the end of the fourth year?

A. $3,506
B. $19,117
C. $20,157
D. $16,000

6. Jay is 30 years old and will retire at age 65. Jay is saving $1,000 a year and believes he will have a constant interest rate of 7% compounded annually on his investments. How much will Jay have accumulated by age 65?

A. $138,237
B. $97,537
C. $66,674
D. $144,469

7. Zumwalt Inc.’s class B stock is expected to pay $6 in annual dividends forever. If the required return on an equivalent investment is 12%, then a share of Zumwalt stock today is worth:

A. $25
B. $100
C. $50
D. None of the above

8. David wishes to accumulate $1 million by the end of 20 years by making equal annual end-of-year deposits over the next 20 years. If David can earn 10% on his investments, how much must he deposit at the end of each year?

A. $16,556
B. $62,745
C. $117,453
D. $17,460

9. A firm is evaluating a proposal that has an initial investment of $500,000 and cash flows of $125,000 for 6 years. The firm’s cost of capital is 12%. What is the internal rate of return of this investment?

A. 13%
B. 11%
C. 20%
D. 9%

10. Below are some raw data displayed in increasing order from top to bottom.

63.5
96.9
112.3
134.1
66.4
98.3
116.2
138.5
75.6
100.5
116.9
139.8
77.5
100.7
118.3
140.7
84.4
102.0
122.0
143.0
87.6
105.5
122.2
143.9
In constructing a frequency distribution using five classes of equal range, if the first class is “60 up to 80”, the class frequency of the third class is:

A. 4
B. 5
C. 8
D. 9

11. The annual rate of return for JSI’s common stock has been:

20X0 Return 14%
20X1 Return 19%
20X2 Return -10%
20X3 Return 14%

What is the arithmetic mean of the rate of return for JSI’s common stock over the four years?

A. 8.62%
B. 9.25%
C. 14.25%
D. None of the above

12. A portfolio generated the following returns over the last three years:

Year 1 Return 10
Year 2 Return -2
Year 3 Return 5

What is the geometric average return for the three-year period?

A. 4.3%
B. 4.2%
C. 1.3%
D. 5.6%

13. A portfolio of non-dividend-paying stocks earned a geometric mean return of 5.0 percent between January 1, 19X2, and December 31, 19X8. The arithmetic mean return for the same period was 6.0 percent. If the market value of the portfolio at the beginning of 19X2 was$100,000, the market value of the portfolio at the end of 19X8 was closest to:

A. $135,000
B. $140,710
C. $142,000
D. $150,363

14. Which investment has the least risk relative to its mean return?

A. Standard deviation = $500 expected return = $5,000
B. Standard deviation = $700 expected return = $500
C. Standard deviation = $900 expected return = $800
D. Standard deviation = $400 expected return = $350

15. The skyscrapers in a city have heights of 40, 35, 46, 57, 84, 45, and 50 stories.
The percentage of buildings with heights within 1.5 standard deviations of the
mean will be at least:

A. 51%
B. 95%
C. 56%
D. 66%

16. Medical Equipment Suppliers, Inc., must choose between two asset purchases. The annual rate of return and related probabilities given below summarize the firm’s analysis:

Asset A Rate of Return 10% Probability 30%
Asset A Rate of Return 15% Probability 40%
Asset A Rate of Return 20% Probability 30%

Asset B Rate of Return 5% Probability 40%
Asset B Rate of Return 15% Probability 20%
Asset B Rate of Return 25% Probability 40%

Using the information provided above, compute the coefficient of variation of
Asset A and Asset B.

A. Asset A: .11 Asset B: .23
B. Asset A: .18 Asset B: .21
C. Asset A: .23 Asset B: .35
D. Asset A: .26 Asset B: .60

17. A portfolio has exhibited the following characteristics over a 3-year period:

Year 1 Return 5% Variance 43
Year 2 Return 10%
Year 3 Return -3%

The average return on risk-free bonds over the same period was 3.5%. Calculate the Sharpe Ratio for this portfolio.

A. .120
B. .001
C. .011
D. .076

18. There is a 40% chance of an expansion, a 20% chance of a stagnant economy, and a 40% chance of a recession. Stocks behave under these scenarios as follows:

Economy Expansion, Stock Performance Good, Probability 70%
Economy Expansion, Stock Performance Fair, Probability 30%
Economy Expansion, Stock Performance Poor, Probability 0%

Economy Stagnant, Stock Performance Good, Probability 40%
Economy Stagnant, Stock Performance Fair, Probability 30%
Economy Stagnant, Stock Performance Poor, Probability 30%

Economy Recession, Stock Performance Good, Probability 0%
Economy Recession, Stock Performance Fair, Probability 40%
Economy Recession, Stock Performance Poor, Probability 60%

What is the probability of stagnant economy and fair stock market?

A. 30%
B. 10%
C. 34%
D. 6%

19. Based on historical data analysis, an equity analyst provides the following probability of future prices for a particular stock:


Probability 0.10, Price $18
Probability 0.10, Price $16
Probability 0.35, Price $15
Probability 0.30, Price $14
Probability 0.15, Price $12

The stock’s expected value is:

A. $14.00
B. $14.50
C. $14.65
D. $15.00

20. An analyst makes the following calculations about the returns for Stock X and Stock Y:

COVxy = 0.0050
ox = 0.20
0y = 0.06

The correlation coefficient between the returns for Stock X and Stock Y is between:

A. 0.00 and 0.25
B. 0.25 and 0.50
C. 0.51 and 0.75
D. 0.76 and 1.00

21. If there are 9 stocks in a portfolio how many ways can the stocks be labeled if 5 are called outperform, 2 perform, and 2 underperform. How many unique ways can 9 stock in a portfolio be labeled if 5 must be called outperform, 2 perform, and 2 underperform?

A. 1,512
B. 756
C. 3,024
D. 1,008

22. Sandi Santa, CFA, a portfolio manager for North Pole Trust, believes that a well-diversified portfolio can be constructed with 30 stocks. How many 30-stock portfolios can be constructed from the S&P 500 index (assuming there are 500 stocks in the index)?

A. 500!/(500-30)!
B. 500!/30!(500-30)!
C. (30)(500)
D. (30!)(500!)

23. Given the following information regarding the possible returns on a capital project, determine the probability that the project will have a return of 5% or greater.

% Return -5, Probability 15%
% Return 0, Probability 20%
% Return 5, Probability 40%
% Return 10, Probability 15%
% Return 15, Probability 10%

A. 90%
B. 65%
C. 40%
D. 20%

24. If the probability of a stock index generating a return greater than 15% in any given year is 6.68%, what is the standard deviation of the returns assuming the mean return is 5%?

A. 6.08
B. 6.66
C. 10.00
D. 44.36

25. Based on a normal distribution with a mean of 500 and standard deviation of 150, what is the z value for an observation at 200?

A. -2.00
B. -1.75
C. 1.75
D. 2.00

ETHICS CFA EXAM SAMPLE

1. Which of the following statements about fundamental responsibilities of members who practice in multiple jurisdictions is TRUE?

A. In cases where federal law differs from CFA Institute®'s Code and Standards, federal law prevails.
B. In the absence of specific applicable laws or other regulatory requirements, the CFA Institute Code and Standards govern the member's conduct.
C. A member who trades securities in a foreign market having no applicable local laws or rules may use material nonpublic information to make investment decisions.
D. A member is required to comply only with applicable local laws, rules, and regulations even though CFA Institute's Code and Standards may impose a higher degree of responsibility.

2. An analyst subject to CFA Institute® Standards of Professional Conduct, to comply with Standard I(A) Fundamental Responsibilities, should do all the following EXCEPT:

A. learn the laws and rules governing his or her conduct.
B. seek the advice of counsel when in doubt concerning the requirements of the law.
C. implementation and/or follow internal compliance procedure designed to prevent legal violations.
D. adopt CFA Institute’s Global Investment Performance Standards (GIPS®) for reporting investment results.

3. Tamara Higgins is the Compliance Officer for Hedge Funds Unlimited, a global hedge fund with offices in New York, London and Singapore. The firm has publicly acknowledged in writing that it has adopted the CFA Institute Code and Standards as its policies. Although Higgins is not currently participating in the CFA program, she will begin the program next year. For purposes of compliance, which of the following is least likely a violation of the firm's policies and the CFA Institute Code and Standards?

A. A portfolio manager at the firm accepts an undisclosed trip to Bermuda as a gift for good performance from a client.
B. An analyst at the firm working overseas uses material nonpublic information as allowed by local law to make investment decisions for discretionary client accounts.
C. A junior analyst at the firm uses a subscription to a financial publication and input from friends and colleagues to make investment recommendations for discretionary client accounts.
D. A CFA Level 3 candidate at the firm includes reference to participation in the CFA program and her status as a Level 3 candidate in her biographical background for an upcoming client presentation.

4. Which of the following violates the CFA Institute® Standards of Professional Conduct on the appropriate use of the Chartered Financial Analyst® and CFA® mark?

A. Langley has passed all three levels of the CFA program, has received his charter, and is a charterholder in good standing. He writes on his business card, "Roger Langley, Chartered Financial Analyst."
B. Langley has passed all three levels of the CFA program, has received his charter, and is a charterholder in good standing. His company writes in promotional literature, "Roger Langley is one of two CFAs in the company."
C. Langley has passed Level 2 and is registered to take the Level 3 examination. In his resume he states, "I am a Level 3 candidate in the CFA program."
D. Langley was awarded the CFA designation in 1980 but stopped paying dues in 2000. In his retirement speech in 2001, he stated, "I was awarded the CFA charter in 1980."

5. John Anderson's company is participating in an acquisition. To speed up the process, his manager gave him a report from another company's analyst, also working on the project, and told Anderson to put it on company letterhead and distribute the report by the end of the day. If Anderson, who is an CFA Institute member, complies, which of the following CFA Institute Standards of Professional Conduct will he have broken?

A. Standard IV(A.2), Research Reports.
B. Standard II(C), Prohibition against Plagiarism.
C. Standard IV(B.6), Prohibition against Misrepresentation.
D. Standard IV(B.2), Portfolio Investment Recommendations and Actions.

6. Ann Smith, CFA, calls Bill Jones, CFA, and tells him that her research shows that Biokem Company is overpriced. After their conversation, Jones arranges a conference call with all the firm’s portfolio managers and announces that his research indicates Biokem is a strong “sell”. According to CFA Institute Standards of Professional Conduct, which of the following statements is most accurate?

A. Jones did not commit plagiarism because Smith’s comments were verbal.
B. Jones has just plagiarized Smith’s research because he did not credit her as the source.
C. Because Smith told Jones, the information is now public; Jones can do whatever he wants with it.
D. Jones did not plagiarize Smith’s work because he did not actually see the research that she produced.

7. Sommerset Brokerage, a retail broker-dealer, employs several CFA charterholders and candidates participating in the CFA program and has publicly acknowledged in writing the adoption of the CFA Institute Code and Standards as the firm's policies. Doug Watson, a CFA Level 2 candidate and registered representative, was recently hired by Sommerset, but failed to notify the firm about his status as a CFA candidate and his outside employment as an instructor for securities licensing examinations. Which of the following best describes Watson's actions under the CFA Institute Code and Standards? Watson has violated:

A. Standard III Relationships and Responsibilities to the Employer, for failing to disclose additional compensation received as an instructor.
B. Standard I Fundamental Responsibilities, by failing to notify his employer within 30 days of hiring of his status as a CFA candidate and that he holds securities licenses.
C. Standard III Relationships and Responsibilities to the Employer, for failing to inform his employer of his obligations under the Code and Standards and to deliver a copy of the Code and Standards.
D. Standard III Relationships and Responsibilities to the Employer, by failing to inform his employer of his obligations under the Code and Standards and for failing to disclose additional compensation received as an instructor.

8. Anna Jacobs, Level 2 CFA candidate, recently left Wellwood Advisers, where she was a portfolio manager, for Lockwood Financial Services. Prior to leaving Wellwood, Jacobs sent a mailing to rejected clients informing them of her move to Lockwood. Jacobs serves as a financial consultant for several local businesses for which she is paid a cash retainer. Upon starting at Lockwood, Jacobs informs her supervisor that she is a CFA candidate and subject to certain rules that the supervisor can learn about from the CFA Institute website. Which of the following regarding Standard III Relationships and Responsibilities to the Employer best describes Jacobs' actions? Jacobs has:

A. violated the Standard by soliciting clients of Wellwood prior to moving to Lockwood.
B. violated the Standard by failing to disclose additional compensation received as a consultant.
C. NOT violated the Standard since she provided proper notification to clients regarding her change from Wellwood to Lockwood.
D. NOT violated the Standard since she informed her new supervisor about her participation in the CFA program and how to find out more information.

9. Which of the following statements about soft dollar standards is FALSE?

A. The investment manager must inform the client that the manager may engage in soft dollar arrangements before doing so.
B. The broker can use brokerage from another client's account to pay for research under the client-directed brokerage arrangement.
C. The investment manager cannot allocate a client's brokerage to a broker based on the amount of referrals the manager receives from the broker.
D. To use client brokerage to buy research, the manager should determine that the research meets the definition of research and that it directly benefits the client.

10. Marianne Riley, CFA, owns an investment research boutique that specializes in mining and exploration stocks. As a local investor, Riley maintains close relationships with local corporate officers, often participating in one-on-one meetings. Riley has a history of prescient investment recommendations and maintains clients throughout Canada, the U.S. and Europe. On a recent conference call with clients and prospects, Riley gives a brief description of a local silver mining company she follows, Silverado, Inc. Riley recommends a "buy" on Silverado, indicating that the stock should advance in the next three to six months based on the fact that she believes consumers are buying more silver products. Which of the following Standards most likely governs Riley's investment recommendation?

A. Standard IV(A.2) Research Reports.
B. Standard II(C) Prohibition Against Plagiarism.
C. Standard IV(B.2) Portfolio Investment Recommendations and Actions.
D. Standard V(A) Prohibition Against Use of Material Nonpublic Information.

11. Ken Toma, a CFA charterholder and leisure services analyst, has just completed an extensive review of the demand for beach vacations in Hawaii and concluded that the demand will far exceed the supply for the foreseeable future. Toma writes a research report stating, "Based on the fact that the demand for Hawaiian beach vacations will exceed the supply of rooms for the foreseeable future, I recommend the purchase of shares of the Hawaiian fund, a diversified portfolio of Hawaiian beachfront resorts." If Toma presents this report to his clients, he will have:

A. violated the CFA Institute standards because he did not distinguish between fact and opinion.
B. complied with the CFA Institute standards by completing a thorough and diligent review of the facts.
C. violated the CFA Institute standards because he made conclusions based only upon his own research.
D. violated the CFA Institute standards because he did not indicate the basic characteristics of the investment.

12. Roger Smith, CFA, has been invited to join a group of analysts in touring the riverboats of River Casino Corp. For the tour, River Casino has arranged chartered flights from casino to casino, since commercial flight schedules are inconvenient and not practical for the group's time schedule. River Casino has also arranged to pay the hotel bill for the three nights of the tour. The trip is purely business. According to CFA Institute Standards of Professional Conduct, Smith should:

A. accept the arrangements as they are.
B. accept the flight, but pay his own hotel bill.
C. offer to pay for his share of the airfare and his own hotel bill.
D. decline to accept the trip because the arrangements are inappropriate.

13. Natalie Oswald, CFA, is the investment manager of a corporate pension plan. Under Employee Retirement Income Security Act (ERISA), she owes her fiduciary duty to:

A. the plan sponsor.
B. the firm's shareholders.
C. all of the above equally.
D. the plan participants and beneficiaries.

14. Jaime Young, CFA, has constructed a portfolio for Donna Rhee that generates an income stream suitable to Rhee's needs and risk tolerances. However, Jim Weaver, Young's supervisor, believes some of the individual assets in the portfolio are inconsistent with an individual of Rhee's age. The supervisor believes Young should eliminate the questionable securities even if it requires putting Rhee into some low-yield assets. According to CFA Institute Standards of Professional Conduct, which of the following is the most appropriate response for Young to give Weaver?

A. Go along with Weaver because he is her supervisor.
B. Quit; her supervisor has no adequate basis for his request.
C. Go along with Weaver because the prudent expert rule applies to the individual components in a portfolio.
D. Explain to Weaver that prudence is based on the characteristics of the client's entire portfolio and not on the individual assets in the portfolio.

15. Dawn Shepard, CFA, is a research analyst for a regional brokerage firm. Her research has convinced her to change her recommendation on the common stock of Orlando, Inc. from "buy" to "sell." She faxed this change to all her current customers who had expressed an interest in Orlando, Inc. The next day, one of her occasional customers who had never before expressed an interest in Orlando calls and places a "buy" order for 500 shares of Orlando. According to CFA Institute Standards of Professional Conduct, Shepard, in these circumstances:

A. may accept the order because she has complied with the fair dealing standard.
B. should advise the customer of the change in recommendation before accepting the order.
C. should delay executing the order until five days have elapsed after the communication of the change in recommendation.
D. may accept the order only if the customer acknowledges in writing that she was notified of the change in the recommendation.

16. Matt Jacobs is a portfolio assistant for Cumberland Investments, a registered investment adviser. Jacobs recently completed Level 2 of the CFA examination and is currently registered for Level III. As part of his daily responsibilities in assisting the portfolio manager, Jacobs implements portfolio trades for discretionary client accounts. All of the following comply with the CFA Institute Code and Standards regarding fiduciary duty EXCEPT Jacobs:

A. includes discretionary accounts of friends and family in client allocations of new issues.
B. allocates trades to asset-based fee accounts and performance-based fee accounts on a pro-rata basis.
C. includes the Cumberland Pension Plan accounts in client trade allocations for similar investment mandates.
D. allocates trades to personal trust accounts under his discretion before client accounts, but after Cumberland proprietary accounts.

17. According to CFA Institute Standards of Professional Conduct, a member who receives confidential information through a relationship of trust must maintain the confidentiality of this information if:

A. the information is highly sensitive or illegal.
B. and only if the information is of a material and nonpublic nature.
C. the information may be construed as a conflict of interest to the member's employer.
D. the information results from, and is relevant to, the business covered by the client relationship.

18. An analyst just told an investor, "You should buy Delfonics Inc. This stock is guaranteed to give you a 100 percent risk-free return over the next six months." Which standard did the analyst violate?

A. Standard IV(B.3) Fair Dealing.
B. Standard IV(B.2b) Appropriateness and Suitability.
C. Standard IV(B.6) Prohibition against Misrepresentation.
D. Standard IV(A. 1) Reasonable Basis and Representations.

19. Chris Matlock, a CFA charterholder and an analyst for R&B Securities, is preparing a buy recommendation on King Company. According to CFA Institute Standards of Professional Conduct, which of the following is NOT a conflict of interest that he would normally disclose?

A. R&B is a market maker for King Company stock.
B. Matlock's son works at King Company.
C. Matlock has a consulting contract with King Company.
D. Matlock's wife has a family trust fund that holds a substantial block of King Company stock.

20. Alyssa Wilcox is a registered representative for Comprehensive Brokers and a CFA Level 1 candidate. Wilcox usually makes investment recommendations for clients based on a semi-annual mailing to clients that requests an update on clients' investment objectives, financial situation and investment experience. Wilcox regularly attends new issue roadshows offered by her colleagues in investment banking, who will give her shares of a new issue if the issue is purchased by at least half of her client accounts. Wilcox has personally received shares in half of the company's total new issue underwritings for the year, but will only allocate shares to large client accounts suitable for investing in new issues. Which of the following best describes Wilcox's actions under the CFA Institute Code and Standards? Wilcox has:

A. fulfilled her responsibility under the Fair Dealing standard [Standard IV(B.3)].
B. not fulfilled her responsibility under the Preservation of Confidentiality standard [Standard IV(B.5)].
C. not fulfilled her responsibility under the Disclosure of Conflicts to Clients standard [Standard IV(B.7)].
D. fulfilled her responsibility under the Portfolio Investment Recommendations and Actions standard [Standard IV(B.2)].

21. Jarrett Rogers, CFA, is a registered principal for Macrovest Broker-Dealer. Rogers is the head of the firm's investment program and recommends certain investment advisers in the program to high net worth individuals looking for separately-managed discretionary accounts. Investment advisers in the program pay Macrovest a portion of their investment management fees to participate in the program, some of which is paid to Rogers as compensation for client recommendations. When a client inquires with Rogers about criteria for including managers in the Macrovest program, Rogers indicates that managers are selected based only on historical investment performance versus a universe of comparable peer investment managers. According to the CFA Institute Code and Standards, Rogers' actions are most likely covered by:

A. Standard IV(B.8) Disclosure of Referral Fees.
B. Standard III(C) Disclosure of Conflicts to Employer.
C. Standard IV(B.6) Prohibition Against Misrepresentation.
D. Standard IV(B.2) Portfolio Investment Recommendations and Actions.

22. Anne Franklin, CFA, is an analyst for Medallion Investments covering technology stocks. Franklin frequently meets with company management and makes on-site visits to company facilities. Cynthia Lucas, chief technology officer for Level Tech, tells Franklin during a one-on-one on-site visit that overseas shipments of the company's revolutionary product are going to be delayed indefinitely due to manufacturing defects. Medallion manages discretionary accounts for Lucas and her family and Lucas frequently shares information with Franklin in appreciation for good stock picks. Subsequent to her meeting, Franklin sends a note to Medallion's investment personnel telling them to "sell the stock", as the shipment information is significant and impacts recent earnings guidance in the market. Franklin's use of the information received from Lucas:

A. violates the Code and Standards, as Franklin received information that was misappropriated and should not have been disseminated.
B. violates the Code and Standards, as Franklin received information through a breach of fiduciary duty and should not have been disseminated.
C. does not violate the Code and Standards, as Franklin was using information that was publicly disclosed and can be used to initiate trading recommendations.
D. does not violate the Code and Standards, as Franklin was adhering to her fiduciary duty to Medallion's clients by sharing the information and recommending a "sell."

23. John Farr, CFA, has accumulated several pieces of nonpublic information about Cattle Corp. of Omaha from his contacts with the company. Although none of this information is material by itself, when Farr combines it with his own analysis, it leads him to conclude that Cattle Corp. will have an unexpectedly low earnings report this year. Cattle Corp. has not announced this information and although Farr has contacted the company, they will not confirm his finding. According to CFA Institute Standards of Professional Conduct, Farr:

A. can use the information to make investment recommendations and decisions.
B. cannot legally invest, divest or make recommendations based on this information.
C. should inform the company in writing that he possesses this information, then after a reasonable time period he can trade on this information.
D. may use the information, but only if his company's compliance officer is able to verify with Cattle Corp. that the material he used was indeed nonmaterial.

24. Bill Fox, CFA, has been preparing a research report on New London Wire and Cable, one of his major investment clients. He had completed much of his analysis and had planned on having his report typed and bound today. Unfortunately, his briefcase was stolen while he ate breakfast, and he lost all his notes and working papers. The lost materials included his notes from management interviews, conversations with suppliers and competitors, dates of company visits, and his computer diskette containing much of his quantitative analysis. Fox's client needs this report tomorrow. In a panic Fox called New London's vice president of finance and was faxed a copy of the company's most recent financial projections. Fox remembered that his own analysis showed that management's estimates were too high. He did not remember the exact amount, so he revised New London's figures downward by 10 percent. Fox also incorporated, without acknowledgement, some charts and graphs on New London from a research report he had received llast week from a small regional research firm and used some information from a S&P reference work. With the help of his secretary, a copy machine, and some creative word processing, Fox got the report done in time for the evening overnight delivery pick up. Fox violated all of the following standards in CFA Institute's Standards of Professional Conduct EXCEPT:

A. Standard II(C) Prohibition against Plagiarism.
B. Standard IV(A.1d) Reasonable Basis—maintain appropriate records.
C. Standard IV(A.1a) Reasonable Basis—exercise diligence and thoroughness.
D. Standard IV(B.2) Portfolio Investment Recommendations and Actions: separating fact from opinion.

25. According to CFA Institute Global Investment Performance Standards (GIPS), which of the following statements concerning the calculation of composite returns is FALSE?

A. Asset weighting within composites is required using beginning of period weights.
B. Portfolios no longer under management should be included in historical composites.
C. Model results may be presented if they conform to the portfolio's investment strategy and objectives.
D. Each composite must include all portfolios or asset classes representing a similar investment strategy or investment objective.

Please send your answers to RGBorja.LGUPolangui@gmail.com.ph on or before April 10, 2008. Thank You.

Orientation for the Chartered Financial Analyst

What is the CFA Program?
• A self-study, distance learning-based program
• Accreditation Process
• Requirements for Award of the Charter
– Sequentially pass Level I, II and III exams
– Have 3 years of relevant professional experience
– Provide professional references (Level III)
– Apply for CFA Institute Membership
– Submit professional conduct statement

Member and Candidate Growth

Components of the Program
• Involves practical and relevant education for investment and other finance professionals

Inputs to the Program
• The learning process is tied to current practice trends
• Job analysis every five years, which involves thousands of practitioner surveys, answers the question: “What knowledge and skills are needed”?
• Candidate Body of Knowledge (CBOK), Curriculum, Learning Outcome Statements (LOS), and exams are all based on this

The Curriculum
? Readings are drawn from various materials
? Each has learning outcome statements (LOS): “The candidate should be able to…”
? Each LOS has one or more command words, which indicate type of learning expected: “discuss, calculate, contrast”
? LOS are NOT a proxy for exam questions, but ARE the best guide for candidate study

Why Take the CFA?
• The Charter is a globally recognized and portable standard of competence and integrity for investment professionals
• Knowledge across core areas of the investment industry
• Respect and credibility in the investment community

More Tangible Charter Benefits
• Greater earning power; in the U.S., the CFA premium is about $40k (+25%)
• Career opportunities in a competitive environment
– Many local charter holders have gone abroad
– Outsourcing; investment-related jobs will eventually find their way to the Philippines
– Hired by brokers, investment/commercial banks, mutual funds, consulting companies, etc.

Examination Features
• Based on assigned readings and LOS
• Average time to answer is limited
– Level I: 1.5 minutes for each of 240 questions
– Levels II and III: Each question is timed
• Exam type:
– Level I is 100% multiple choice
– Level II is 100% item set
– Level III is 50% item set, 50% essay

Examination Features
• Total exam time is six hours for all 3 levels; three hours each for the AM and PM sessions
• Topic weights are shown in the study guide
• Many questions tend to repeat the same concepts or computational procedures from previous exams
• Again, the LOS provide you an important guide as to the types of questions you will encounter

Grading of the Exams
• Guiding philosophy is fairness and consistency
• A detailed and structured process
• Depending on the type, questions are either 1) machine graded or 2) graded by a team of charter holders
• Answers to Essay questions are evaluated for knowledge and content, not style or language

Minimum Passing Score (MPS)
• Set by the CFA Institute Board of Governors
• Various inputs and metrics used
• Passing rate for each level is a residual determined by each level’s MPS
• The MPS is set for the exam as a whole and not for individual topic areas or item sets
• Ethics/FSA are very important sections; may determine if you pass or fail

Individual Preparation
• The best strategy is to be overly prepared
• Make time for your studies
– Bare minimum of 250 hours; better if 300 hours
– Excludes attendance in review course
– 30 weeks x 10 hours per week = 300 hours
• Read ALL materials (twice if possible) and hone skills through practice exams, quizzes
• Read more about the CFA program
• Use the Study Guide (2006) as your map
• Before each of our sessions, you should have:
– Read the assigned readings
– Solve the quizzes, sample exams, problems, etc.
•After each session:
– Solve more practice questions
– See if you are comfortable with the LOS
• After the course, you will have about 5 weeks to go back and review everything

Assorted Tips
• Try studying/buying materials in groups
• Ask for study leave from your boss/firm
– Write a letter to justify this “special” leave
– You’ll never know unless you try
• Use the sample exams to determine your weak areas and then concentrate on them
• Know your calculator (Texas BAII+/HP 12c only)
• Take a break during Christmas/Holy Week

CFA Candidate Self - Assessment Test

CFA Candidate Self-Assessment Test

A reader of our's have emailed me to post the CFA Exam that I took last February 23. I have already posted the answers and principles of the wrong answers I had. Now I am posting the whole exam. I encourage everyone to try and answer the said self-assessment test. Have fun...

You can send your answers at the comments section of the blog... Good Luck!

The CFA Program is postgraduate. The readings assigned in the study program and the questions on
the CFA examinations are geared for individuals who are prepared to deal with “masters”-level
coursework. Although many candidates enter the program with a business school education, others
may have a liberal arts background. No prerequisite courses of study are specified for entering the
CFA Program, but candidates should be aware that the assigned readings in many topic areas are
beyond a basic, introductory level.

The Level I Financial Statement Analysis material is directed at an intermediate/advanced level of
understanding. Before entering the CFA Program, candidates should be familiar with financial
accounting methods and financial statements. Candidates without a strong accounting background
or who need to refresh their accounting knowledge should review an intermediate financial
accounting textbook or enroll in a local university financial accounting course.

The Level I Economic Analysis material is also directed at an intermediate level of understanding.
Before entering the program, candidates already should be familiar with the principles of
macroeconomics, microeconomics, and the monetary system. If candidates do not have this
educational background or they wish to refresh their understanding of this material, a review of an
introductory level textbook or enrollment in a local university economics survey course is
appropriate.

The Level I curriculum in general assumes a basic understanding of financial markets and
instruments. Before entering the program, candidates should be familiar with the basic
characteristics of equity and fixed income markets and securities. Candidates without that
familiarity should review an introductory level textbook that addresses financial markets and
instruments.

The self-assessment test is designed to help candidates determine their need to review pre-CFA
materials. An answer key is provided at the end of the test. Candidates scoring less than 70 percent
correct in any one topic area should commit to additional study time preparing for that area prior to
or in conjunction with the CFA study program.

CFA Candidate Self-Assessment Test
Questions

FINANCIAL STATEMENT ANALYSIS: 30 Questions

Note to candidates: Questions 1 through 30 are based on U.S. generally accepted accounting
principles (GAAP) unless otherwise noted.

1. Accrual accounting techniques are used to:
A. assign revenues and expenses to the appropriate accounting period.
B. record the anticipated effects of actions that may occur at a future date.
C. report the results of actions whose monetary effects are difficult to estimate.
D. allocate nonoperating revenues and expenses to the appropriate business unit.

2. Which of the following is NOT considered an asset?
A. Inventory
B. Trademarks
C. Retained earnings
D. Accounts receivable

Use the information in the following table to answer Questions 3 and 4.

Black Company
Balance Sheet
December 31, 200X

Assets
Cash $100,000
Short-term investments 50,000
Accounts and notes receivable 130,000
Inventory 140,000
Land 170,000
Building $200,000
less accumulated depreciation (40,000) 160,000
Trademarks 110,000
Total Assets $860,000

Liabilities
Notes payable (due in 3 months) $80,000
Accounts payable 40,000
Accrued salaries payable 10,000
Mortgage payable (due in 8 years) 180,000
Total Liabilities $310,000

Stockholders’ Equity
Common stock $500,000
Retained earnings 50,000
Total Stockholder's Equity $550,000

Total Liabilities and Stockholders’ Equity $860,000

3. The total amount of Black Company’s assets to be classified as current assets is:
A. $150,000.
B. $280,000.
C. $420,000.
D. $590,000.

4. The net amount of Black Company’s earnings that has been reinvested in the company since the company’s inception is closest to:
A. $50,000.
B. $100,000.
C. $500,000.
D. $550,000.

5. When accounting for merchandising businesses, gross margin equals the difference between:
A. net sales and cost of goods sold.
B. net sales and operating expenses.
C. gross sales and the sum of returns and allowances.
D. net sales and the sum of cost of goods sold and operating expenses.

6. Which of the following would NOT contribute to the difference between gross sales and net sales?
A. Cash refunds for returned products.
B. Discounts from listed prices for delayed shipping.
C. Allowances off selling prices for defective products.
D. Sales made on credit rather than for immediate payment.

7. Classifying an investment as short-term or long-term depends primarily on:
A. the dollar amount of the investment.
B. the length of time the investor has held the investment.
C. whether a liquid market exists for selling the investment.
D. the length of time the investor expects to hold the investment.

8. Under the allowance method for accounting for uncollectible accounts:
A. losses from bad debts are recognized when defaults occur.
B. estimated losses from potentially uncollectible debt are amortized over the life of the obligation.
C. loans to high-risk borrowers are recorded at a discount relative to their stated principal amounts.
D. losses from bad debts are estimated for the same period in which the corresponding credit sales occur.

9. A company’s cost of inventory purchases was $250,000 during the year, its ending inventory was $80,000, and its beginning inventory was $100,000. The company’s cost of goods sold was closest to:
A. $170,000.
B. $270,000.
C. $330,000.
D. $370,000.

10. Inventory valuation methods rely primarily on assumptions about the flow of:
A. costs.
B. values.
C. money.
D. resale prices.

11. For a company with new fixed assets, which of the following combinations of accounting practices will most likely lead to the highest reported earnings in an inflationary environment?

Depreciation Method Inventory Method
A. Straight-line First in, first out (FIFO)
D. Straight-line Last in, first out (LIFO)
B. Double-declining-balance First in, first out (FIFO)
C. Double-declining-balance Last in, first out (LIFO)

12. In a period of rising prices, which of the following inventory methods generally results in the lowest reported net income?
A. FIFO method.
B. LIFO method.
C. Average-cost method.
D. Specific-identification method.

13. In a period of rising prices and stable inventory quantities, compared to a company that uses the FIFO inventory valuation method, a company using LIFO is likely to have higher:
A. inventory.
B. income taxes.
C. current assets.
D. cost of goods sold.

14. If a company’s ending inventory is understated by $3,000 and beginning inventory is overstated by $5,000, the company’s operating income will most likely be:
A. overstated by $2,000.
B. overstated by $8,000.
C. understated by $2,000.
D. understated by $8,000.

15. When applying the lower-of-cost-or-market rule to inventory, market generally refers to:
A. resale value.
B. original cost.
C. current replacement cost.
D. original cost less physical deterioration.

16. A company bought a truck on January 1 for $30,000. The truck has a five-year estimated useful life and a $5,000 residual value. Under the straight-line depreciation method, the asset’s carrying value for financial reporting purposes after two years is closest to:
A. $16,000.
B. $18,000.
C. $20,000.
D. $21,000.

17. For purposes of determining the amount of a capital expenditure, the acquisition cost of equipment would NOT include:
A. transportation cost.
B. insurance cost during transit.
C. cost of testing equipment during installation.
D. repair cost of damage incurred during installation.

18. Depreciation differs from other types of expenses in that depreciation:
A. can be measured more precisely.
B. does not require an immediate cash outlay.
C. is not deductible if it would result in a net loss.
D. can be avoided if the company acquires used assets.

19. If a company issued bonds at a discount, the discount is amortized over the life of the bonds and:
A. decreases the periodic interest payment below the interest expense charged.
B. increases the periodic interest expense charged above the interest payment made.
C. increases the periodic interest payment made above the interest expense charged.
D. decreases the periodic interest expense charged below the interest payment made.

20. On a company’s balance sheet, which of the following would NOT be listed as contributed capital?
A. Common stock
B. Preferred stock
C. Retained earnings
D. Paid-in-capital in excess of par value

21. Which of the following accurately describes the effects of a purchase of treasury stock on a company’s assets and stockholders’ equity?

Assets Stockholders’ Equity
A. Decreased Decreased
B. Decreased Unchanged
C. Unchanged Decreased
D. Unchanged Unchanged

22. If a corporation declares and pays a dividend, this transaction will:
A. increase liabilities.
B. decrease net income.
C. not affect total assets.
D. reduce stockholders’ equity.

23. A company’s assets and stockholders’ equity are most likely to be reduced by:
A. stock splits.
B. cash dividends.
C. stock dividends.
D. reverse stock splits.

24. The financial results from a discontinued operation should be reflected on a company’s financial statements by:
A. discussing the effects in a footnote.
B. adjusting the company’s reported costs.
C. adjusting the company’s reported net revenue.
D. reporting the effects separately on the income statement.

Questions 25 through 27 should be answered in the context of a statement of cash flows and using the following data for a company:

Cash payments for interest $ 12
Retirement of common stock 32
Cash payments to merchandise suppliers 85
Purchase of land 8
Sale of equipment 30
Payment of dividends 37
Cash payment for salaries 35
Cash collection from customers 260
Purchase of equipment 40

25. The company’s cash flows from operating activities are closest to:
A. $91.
B. $128.
C. $140.
D. $175.

26. The company’s cash flows from investing activities are closest to:
A. –$67.
B. –$48.
C. –$18.
D. –$10.

27. The company’s cash flows from financing activities are closest to:
A. –$81.
B. –$69.
C. –$49.
D. –$37.

28. Which of the following is NOT an accurate statement of the balance sheet equation?
A. Assets – Liabilities = Owners’ Equity.
B. Assets – Owners’ Equity = Liabilities.
C. Assets = Liabilities + Owners’ Equity.
D. Assets = Liabilities – Owners’ Equity.

29. Which of the following financial statements presents information about a business at a point in time?
A. Balance sheet
B. Income statement
C. Statement of cash flows
D. Statement of retained earnings

30. The responsibilities of the auditor of a company’s financial statements do NOT include a requirement to:
A. confirm assets and liabilities.
B. examine the company’s internal control systems.
C. verify that the financial statements are free from any any error.
D. agree that management’s choice of accounting principles is appropriate.

ECONOMICS: 30 Questions

31. When comparing gross national product (GNP) and gross domestic product (GDP), GDP is most likely to exclude:
A. net exports.
B. foreign security transactions.
C. income earned by citizens abroad.
D. payments for national income taxes.

32. Using the expenditure approach, gross domestic product includes gross:
A. income taxes paid.
B. salaries and wages paid.
C. imports from foreigners.
D. private domestic investment.

33. An analyst, calculating the gross domestic product for an economy, is most likely to include:
A. sales of services.
B. financial transactions.
C. sales of intermediate goods.
D. government transfer payments.

34. The presence of a surplus of a good in a market is most likely to result in a(n):
A. decrease in supply.
B. decrease in demand.
C. increase in supply elasticity.
D. increase in quantity demanded.

35. An analyst interested in understanding movements in the general level of prices throughout the economy is most likely to use the:
A. consumer price index (CPI).
B. gross domestic product (GDP) deflator.
C. weighted average of the CPI and the GDP deflator.
D. correlation coefficient between the CPI and the GDP deflator.

36. Which of the following is a limitation of GDP as a measure of aggregate economic activity? GDP excludes:
A. imports to foreigners.
B. production of household services.
C. governmental consumption of goods.
D. private investment in depreciable assets.

37. Which of the following statements about phases of the business cycle is most accurate?
A. During an expansion, real output grows and unemployment increases.
B. During contraction, real output declines and unemployment decreases.
C. The business peak is the highest output (measured in GDP) of an expansion.
D. The recessionary trough measures deviations of real GDP from the trend line.

38. An analyst calculating the unemployed rate is most likely to classify as unemployed persons who are:
A. retired.
B. not looking for work.
C. temporarily laid off from a job.
D. working in their own households.

39. Frictional unemployment results from:
A. inflexible wages in the marketplace.
B. recessionary business conditions and inadequate aggregate demand for labor.
C. structural characteristics of the economy that create difficulties for job seekers in finding employment and for employers in hiring workers.
D. constant changes in the economy that prevent qualified unemployed workers from being immediately matched up with existing job openings.

40. To be useful, a measure of inflation for an economy would most likely reflect information about the change in prices of:
A. goods only.
B. goods and services only.
C. goods, services, and financial assets only.
D. goods, services, financial assets, and real assets.

41. If the consumer price index is 252 this year compared with 240 last year, the rate of inflation for the year is closest to:
A. 4.76%.
B. 4.88%.
C. 5.00%.
D. 12.00%.

42. A period when an economy is experiencing substantial inflation and either a declining or slow rate of growth in output is called:
A. deflation.
B. stagflation.
C. depression.
D. contraction.

43. Which of the following is NOT a source of adverse effects of inflation on an economy? Inflation:
A. distorts the information delivered by prices.
B. affects product prices without changing underlying resource prices, such as wages, in the long run.
C. increases the uncertainty accompanying investment and other activities involving future payments.
D. causes wasted resources as individuals attempt to prevent the erosion of their income and wealth as a result of the inflation.

44. Aggregate demand is least likely to increase as a result of a(n):
A. increase in real wealth.
B. decrease in the real rate of interest.
C. increase in the expected rate of inflation.
D. increase in the exchange rate value of the nation’s currency.

45. Which of the following factors will decrease long-run aggregate supply?
A. Supply shocks.
B. A reduction in the supply of resources.
C. An improvement in technology and productivity.
D. Intensified competition in markets for goods and services.

46. Which of the following factors is least likely to play a role in the self-correcting mechanisms that help stabilize the economy? The pattern of:
A. price adjustments in resource markets.
B. changes in employment levels in labor markets.
C. interest rate adjustments in loanable funds markets.
D. changes in consumption in response to fluctuations in income.

47. The views of the classical economists and the Keynesian model differ with respect to the:
A. amount of flexibility in wages and prices.
B. level of the natural rate of unemployment.
C. appropriate definition of the money supply.
D. determinants of the long-run aggregate supply curve.

48. Which of the following conditions is present when macroeconomic equilibrium is achieved in the Keynesian model?
A. Autonomous expenditures are zero.
B. Planned imports and planned exports are equal.
C. Government spending levels and taxes are equal.
D. Planned expenditures and current output are equal.

49. An analyst has gathered the following consumption information:

Income Current Consumption
$20,000 $19,000
24,000 22,000

The marginal propensity to consume (MPC) is closest to:
A. 0.50.
B. 0.75.
C. 0.86.
D. 1.33.

50. According to the Keynesian model, if the marginal propensity to consume is 0.8, an independent increase in investment expenditures of $10 billion is most likely to lead to an increase in the equilibrium level of aggregate income of:
A. $8 billion.
B. $12.5 billion.
C. $50 billion.
D. $80 billion.

51. The law of demand states that an:
A. increase in price can be expected as consumers demand more units of a product.
B. inverse relationship exists between the price and the amount of a good purchased.
C. increase in price will result from an increase in demand for a good in scarce supply.
D. increase in the quantity of a good available will occur when the price of the good increases.

52. The law of supply states that:
A. a direct relationship exists between the price of a good and the amount supplied.
B. suppliers provide more of a good as the price of the resources needed to produce the good rises.
C. an inverse relationship exists between the price of a good and the amount purchased by suppliers.
D. an inverse relationship exists between the price of a good and the amount that buyers choose to purchase.

53. The price elasticity of demand for a commodity is determined primarily by the:
A. incomes of consumers.
B. size of the consumer surplus.
C. availability of complementary goods.
D. availability of substitutes for the goods.

54. In comparing the short-run and long-run responses of purchases to an unexpected increase in price, responses are typically:
A. larger in the short run than in the long run.
B. smaller in the short run than in the long run.
C. approximately the same in the short run as in the long run.
D. dependent, with respect to magnitude, on the level of competition in the market.

55. The demand for a good is least likely to decrease as the result of a:
A. fall in consumer income.
B. rise in the expected future price of the good.
C. fall in the number of consumers in the market.
D. rise in the price of a complementary good often used with the original good.

56. The supply of a good is least likely to increase as the result of:
A. favorable weather.
B. fall in the price of a resource used in producing the good.
C. an increase in the taxes imposed on the producers of the good.
D. a technological change allowing cheaper production of the good.

57. A shift in the demand curve for a good is least likely to result from:
A.increased price for the good.
B. increased incomes of buyers.
C.increased price of a substitute good.
D. decreased price of a complementary good.

58. Which of the following conditions is required for equilibrium in a market?
A. Producer surplus is minimized.
B. No restrictions exist on the movement of a good.
C. The quantity demanded must equal the quantity supplied.
D. The producer’s opportunity cost must equal the market price.

59. Which of the following conditions must be met to achieve economic efficiency?
A. All activities that produce more benefits than costs for the individuals within an economy are undertaken.
B. A large number of sellers exist that supply differentiated products to a market with low barriers to entry.
C. A small number of sellers exist that supply products at prices that reflect savings from economies of scale.
D. A large number of small companies exist producing an identical product in an industry that has complete freedom of entry and exit.

60. Which of the following factors is least likely to provide a valid basis for government action to improve the performance of markets?
A. Externalities
B. Public goods
C. Excessive competition among sellers
D. Incomplete information for market participants

MARKETS AND INSTRUMENTS: 5 Questions

61. The call feature associated with a corporate bond determines the:
A. date on which bondholders can request that their funds be repaid.
B. terms under which the borrowing company can redeem the bond prior to maturity.
C. conditions under which bondholders can request that the company add to its financial reserves.
D. requirements for the borrowing company to notify bondholders about material changes in its financial condition.

62. The seniority of a bond refers to the:
A. time remaining until the bond matures.
B. average age of the assets securing the bond.
C. time that has passed since the bond was issued.
D. priority of the bond’s claim on the company’s assets.

63. Yankee bonds are fixed-income securities that are issued:
A. in the US by non-US borrowers, paying interest in US dollars.
B. in the US by non-US borrowers, paying interest in a non-dollar currency.
C. outside the US by US borrowers, paying interest in US dollars.
D. outside the US by US borrowers, paying interest in a non-dollar currency.

64. Futures contracts provide for the:
A. optional delivery of an asset at a specified future date for a specified payment.
B. mandatory delivery of an asset at a specified future date for a specified payment.
C. optional delivery of an asset at a specified future date for a payment to be determined at the future date.
D. mandatory delivery of an asset at a specified future date for a payment to be determined at the future date.

65. A real estate investment trust provides a means for investing in:
A. a portfolio of real estate assets.
B. the non-US real estate assets of US companies.
C. the cash flows generated by rental payments on commercial property.
D. a portfolio of shares in companies that develop or own real estate assets.



Choose to be Rich Workbook
022808

Kiyosaki espouses that we must have a clear monthly record of all our financial concerns and whereabouts. The data I have presented here are rough drafts... Next month it will be more specific since I will start my record keeping...


Record Keeping
Personal Info

Name: RONALDO GUERRERO BORJA Date: February 28, 2008

Name: RONALDO GUERRERO BORJA
Address: Centro, POlangui, Albay
Date, Place of Birth: April 16, 1978; Sampaloc,Manila
Social Security Number: Lost

Debts (Auto, Education, Personal, Credit Card, Mortgage, other)

Other loan insitution: RUSI
Address: Diversion Road, Polangui, Albay
Phone Number: 09275359634
Account Number:
Interest Rate:
Monthly Payment: P1,530 if on/before the due date; P1,730 after the due date
Total Balance Due: P41,520 (based on the after the due date figure)
(with date prepared)

Bank Accounts (Checking, Savings, CDs, Credit Union, Other)

Bank Name: G7 Bank
Type of Account: Savings
Account Number: 17898-12
Address: Ubaliw, Polangui, Albay
Phone Number:
Contact: Jonie Tinoco
Interest Rate:
Average Monthly Income:
Total Balance P503.05
(with date prepared)

Bank Name: Legazpi Savings Bank Bank
Type of Account: Savings
Account Number: 004-01-6601
Address: Basud, Polangui, Albay
Phone Number:
Contact:
Interest Rate: Effective Rate of interest of 2% per annum
Average Monthly Income:
Total Balance P4,003.07
(with date prepared)

Bank Name: Camalig Bank
Type of Account: Savings
Account Number: 18928
Address: Camalig, Albay
Phone Number:
Contact:
Interest Rate:
Average Monthly Income:
Total Balance P184.50
(with date prepared)



Brokerage Accounts (Stocks, Bonds, Mutual Funds) = 0
Investments held directly by you = 0
Real Estate Investments = 0
Retirement Plans = 0
Insurance Plans = 0



I AM SO HAPPY AND GREATFUL NOW THAT…
022908

1. I am successful!
2. I am a money magnet!
3. I have lots of friends!
4. I have lots of support!

CFA DIAGNOSTIC EXAM SAMPLER!

9th day of the odyssey...

For this day I am giving you a sampler of what a CFA Diagnostic exam looks like... I invite you to send your answers via comments, the one with the highest score will receive a special price from the author, (for readers residing on Philippines only)... The deadline is on March 5, 2008... I will also post the answers on the said date... Good Luck!

CFA REVIEW COURSE
Level I Diagnostic Exam
40 Questions, 60 Minutes


QUESTIONS 1 THROUGH 5 RELATE TO ETHICAL AND PROFESSIONAL STANDARDS

1. Each of the following would constitute plagiarism except:
A. Quoting sources from a “leading analyst” without any specific reference given.
B. Using a statistic from a well-known statistical reporting company without acknowledgement.
C. Verbal comment made by an analyst in a presentation which was not an original idea
D. Selected portions of another brokerage firm’s report, without attribution.

2. Mr. Richard Rikin successfully completed the Level 1 Examinations and Mr. Dennis Reinoso successfully completed the Level 3 Examinations of the CFA Program. Mr. Rikin registered for the Level 2 Examinations. Mr. Reinoso still needs to complete the work requirement for the charter. The correct way to present their involvement in the program is

For Mr. Richard Rikin For Mr. Dennis Reinoso
A. Mr. Richard Rikin, CFA Level 1 Mr. Dennis Reinoso, CFA Level 3
B. Mr. Richard Rikin, CFA Level 1 Mr. Dennis Reinoso, will be eligible for the charter upon completion of required work experience
C. Mr. Richard Rikin is a Level 2 Candidate in the CFA Program Mr. Dennis Reinoso, CFA Level 3
D. Mr. Richard Rikin is a Level 2 Candidate in the CFA Program Mr. Dennis Reinoso, will be eligible for the charter upon completion of required work experience

3.Which of the following statements is true?

I. Insider information is that which is both non-public and material.
II. An investor can make a trade based on a set of non-public and non-material information.
III. A Chartered Financial Analyst, working in the U.S., can use insider information to buy a foreign stock because there is no law prohibiting such transaction in the country where such stock is listed.

A. I only
B. I and II only
C. II and III only
D. All are true

4. Anna Nichols is a research analyst preparing a report on Enterprise Company. In order to ensure accuracy in her report, she sends the report to the Chief Financial Officer (CFO) of Enterprise to allow him to point out some factual errors. The CFO makes some corrections, which Nichols checks and agrees with. The CFO also sends Nichols several pages of market analyses that appear favorable for Enterprise. Nichols checks the analyses for accuracy and includes a summary of them in her report, pointing out that the data came from Enterprise. Nichols has:

A. violated the Standards by sending the report to the CFO before sending it to her clients.
B. violated the Standards by not including all of the data the CFO provided to her.
C. violated the Standards by including the data from the CFO in the report.
D. not violated any Standard.

5. While on a business trip, John Hayes, CFA, found a notebook that had apparently been left in the waiting area of an airport. Hayes opened the notebook and read the title: Confidential: 2001 Level II CFA Examination. Before returning the notebook to AIMR, he made a copy and gave it to Linda Sacket, one of his firm's analysts, who was a candidate for Level II of the CFA examination. Hayes reasoned that AIMR would not use these questions and that Sacket would benefit from reviewing these questions. Sacket read the questions and guideline answers before taking the Level II examination. According to the AIMR Standards of Professional Conduct involving professional misconduct:

A. Hayes violated the Standards, but Sacket did not.
B. Sacket violated the Standards, but Hayes did not.
C. both Hayes and Sacket violated the Standards.
D. neither Hayes nor Sacket violated the Standards.


QUESTIONS 6 THROUGH 13 RELATE TO ECONOMICS

6. If the reserve requirement is 20%, a new deposit of $1,000 will increase the money supply by:
A. potentially as much as $5,000.
B. at least $1,000.
C. potentially as much as $4,000.
D. potentially as much as $1,000.

7. In a perfectly competitive market,
I. each competitor faces perfectly elastic demand for its product.
II. a competitor can gain market share by differentiating it product.
III. in the long run all firms will earn zero economic profit.
IV. in the long run all firms will earn accounting profit.

A. I only.
B. I and III.
C. I, II and III.
D. I, II and IV.

8. Once a firm reaches a point of diminishing marginal returns:
A. marginal costs will decrease, causing average total costs to decrease.
B. marginal costs will increase, causing average total costs to increase.
C. marginal costs will increase, having no effect on average total costs.
D. marginal costs will increase, but the effect on average total cost will depend on the change in average fixed cost.

9. A firm in a competitive price-searcher market
A. faces an inelastic demand curve.
B. must be concerned not only with existing competitors but new potential entrants as well.
C. is somewhat protected from competition by high barriers to entry.
D. is unlikely to derive any benefit from advertising.

10. According to the Crowding-Out Model,
A. rising tax rates will reduce demand as more money is taken away from the private sector.
B. increased government spending will have no effect on aggregate demand.
C. expansionary fiscal policy puts the government in competition with the private sector for a limited supply of loanable funds.
D. the best strategy to stimulate demand during a recession is restrictive fiscal policy.

11. M1 includes all of the following except:
A. demand deposits.
B. traveler's checks.
C. passbook savings accounts
D. currency in circulation.

12. If the Japanese Yen depreciates against the U.S. Dollar:
A. It takes less Yen to buy products priced in Dollars.
B. It takes more Dollars to buy products priced in Yen.
C. It takes more Yen to buy products in any currency.
D. It takes more Yen to buy products priced in Dollars.

13. As long as the _____ production costs of goods and services differ between nations, the nations will be able to benefit from trade.
A. absolute
B. total
C. relative
D. unit

QUESTIONS 14 THROUGH 22 RELATE TO QUANTITATIVE METHODS

14. Two alternative investments, both costing PhP1,000,000 are being offered. Investment A will pay a lump sum of PhP2,000,000 after 5 years while Investment B will pay PhP300,000 per year for five years beginning one year from now. Assuming an interest rate of 10%, which of the following statements are true?

I. Investment A has a higher NPV.
II. Investment B has a higher IRR.

A. Only statement I is True.
B. Only statement II is True.
C. Statements I and II are true.
D. Statements I and II are false.

15. In a normal probability distribution:
A. The expected value is equal to both the mode and the median.
B. Large deviations from the mean are less likely than small deviations.
C. The distribution can be identified completely by the expected and the standard deviation.
D. All of the above.

16. Multiple regression analysis refers to:
A. Analyzing the effect of several dependent variables on one independent variable.
B. Analyzing the effect of several independent variables on one dependent variable.
C. Performing several iterations of a linear regression to determine the regression line with the best fit to the data.
D. Performing several iterations of a linear regression to determine the regression line with the highest R2

17. Javyee Eizaguru bought a new car, Ford, on terms. He paid $500 down, signed a note at 12% requiring $150 monthly payment for 2 years. How much did he pay for the car?
A. $3,187
B. $3,687
C. $1,253
D. $4,100


18. You have been offered perpetuity of $1,000 annually in exchange for $50,000. What interest rate is implicit in this transaction?
A. 1.0%
B. 2.0%
C. 2.5%
D. 20.0%

19. Which of the following options is the most desirable for a borrower taking out a loan?
A. Pay 8% compounded daily.
B. Pay 8.2% compounded monthly
C. Pay 8.3% compounded quarterly.
D. Pay 8.5% compounded annually.

20. Which of the measures assume that all proceeds are reinvested?
A. Time-weighted rate of return
B. IRR
C. Dollar-weighted rate of return
D. Arithmetic rate of return

21. Investing for more holding periods:
A. Will reduce overall risk
B. Will neither increase or decrease overall risk
C. Increases the amount at risk
D. Increases risk only if the holding period returns are not independent

22. Jenny Clevera would like to send her daughter Sheryl to Jasmine College in ten years. She has estimated that the cost of college by then will be $30,000 per year. Assuming she can earn 8% on her investments, how much must she set aside to meet the expected college bills?
A. $99,363
B. $62,776
C. $55,583
D. $46,025


QUESTIONS 23 THROUGH 36 RELATE TO FINANCIAL ACCOUNTING AND STATEMENT ANALYSIS

23. Among the following, the most important tool for investors is the:
A. Balance sheet
B. Income statement
C. Statement of cash flows
D. Statement of changes in stockholders’ equity

24. The cash flow from operations can:
A. Be manipulated
B. Usually predict bankruptcy
C. Be affected by issuing stock
D. Be affected by capital expenditure

25. Many companies prefer to have operating leases rather than capital leases because:

A. In the later years of the lease, operating income will be higher.
B. In the early years of the lease, rent expense is usually less than the sum of depreciation and interest expense.
C. Operating leases are not reported in the annual report
D. Over the life of the lease, income will be greater using an operating lease.

26. The most conservative way to compute interest coverage if a company has capitalized interest is to:
A. Compute the ratio using interest actually paid.
B. Add the capitalized interest back to net income and compute the ratio.
C. Deduct capitalized interest from interest expense and compute the ratio.
D. Add capitalized interest to interest actually paid and compute the ratio.

27. Which of the following is a benefit of FIFO?
A. Higher taxes
B. Less inflation effect on COGS
C. Higher ROE
D. Higher liquidity ratios

28. An unexpected increase in inventory might be a sign of:
A. Higher future demand
B. Unexpected decline in sales
C. a & b.
D. Higher current ratio

29. The area of accounting that gives management the greatest discretion to determine timing of income is
A. Inventory accounting.
B. Accounting for marketable securities.
C. Accounting for impaired assets.
D. Convertible debt accounting.

30. A firm that tends to capitalize certain costs rather than expense them will:
A. eventually have problems with the SEC.
B. have higher net income over the long-term.
C. have higher cash flow over the near-term.
D. have smoother net income.

31. Which of the following cannot be capitalized?
A. Trademarks.
B. Software development.
C. Research and development.
D. Franchises.

32. One method of increasing net income without having a separate line item on the balance sheet is to:
A. change depreciation methods.
B. change asset lives.
C. change interest rate assumptions.
D. none of the above.

33. For bonds issued at premium, interest expense:
A. goes down over time.
B. goes up over time.
C. stays the same.
D. will depend on the effective interest rate.

34. When computing a valuation ratio, the correct method of valuing debt is:
A. face value.
B. par value.
C. market value.
D. conversion value.

35. Selling accounts receivable artificially improve the:
A. Current ratio
B. Debt/equity ratio
C. Tax rate
D. Return on equity

36. What should an analyst use to estimate real economic depreciation of a fixed asset?
A. Tax depreciation.
B. GAAP depreciation.
C. Units of production method.
D. Must be evaluated on a case by case basis.


QUESTIONS 37 THROUGH 40 RELATE TO ASSET VALUATION AND PORTFOLIO MANAGEMENT

37. In analyzing different industries, those with high P/E ratios will typically have:
A. low payout ratios
B. high payout ratios
C.low growth rates
D. too much leverage

38. Beta can be viewed as:
A. a measure of growth
B. a measure of systematic risk
C. a measure of correlation
D. a measure of total risk

39. Each of the following is a disadvantage to investing in real estate except:
A. illiquidity
B. cyclicality of the market
C. high correlation of real estate returns with common stock returns
D. high management costs

40. Company A has a substantially higher dividend pay out ratio compared to Company B. Everything else about the two companies is identical. After several years, which of the following statements about Company A and Company would most likely be TRUE?
I. Company A would have a higher stock price.
II. Company B would have a lower debt/equity ratio.

A. Only statement I is most likely True.
B. Only statement II is most likely True.
C. Statements I and II are both most likely true.
D. Neither statement I nor II are likely to be true.

CHOOSE TO BE RICH WORK BOOK
022308

Wants
1. To become a CFA...
2. To become finacially free/ultra rich...
3. To own a medieval castle at Scotland...
4. To be a best selling inspirational author and lecturer...
5. To organize and build an International NGO focusing on the rights and welfare of street children and youth...
6. To own a massive library...
7. To have a massive collection of Naruto, Samurai X, X-men, Beatles, etc...
8. To own a vintage race car with historical sentiment...
9. To build my own university focusing on financial intelligence, emotional quotient and personality development...

Don't Wants
1. To die a vagabond...
2. To work all of my life...
3. To be a part of the rat race...
4. To be a slave of money...
5. To be sickly...
6. To become a loser...
7. To become a shadow of my father and predecessors...
8. To become undisciplined and disrganized...
9. To be a traditional politician...


I AM SO HAPPY AND GREATFUL NOW THAT…
022308

1. An oppurtinity to go out of the country was presented...
2. My anti virus was updated and got the Worm/Agent A...
3. For being a CFA...
4. For the Millions!

CFA REVIEW...

CFA REVIEW

I have answered the CFA Candidate Self – Assessment Test, the result is so inspiring he he he he he…

Financial Statement Analysis (FSA) – 47%
Economics (Econ) – 50%
Markets and Instruments (MI) – 20%

Below I have listed the principles and answers from my wrong answers…


FSA

• Under accrual accounting, credit sales as well as cash sales are recognized in net revenue when earned (Ref: Needles and Powers, Financial Accounting, 7th ed., p.242)

• Inventory costing methods rely primarily on assumptions about the flow of cost. The cost flow assumed may or may not be the same as the physical flow of goods. (Ref: Needles and Powers, Financial Accounting, 7th ed., p.379)

• With new fixed assets, straight – line depreciation results in lower depreciation than the double – declining balance method. Lower depreciation leads to higher reported earnings. Given the inflationary economy, using FIFO (First In First Out) leads to the inclusion of less expensive inventory items in cost of goods sold, which also leads to higher reported earnings. (Ref: Needles and Powers, Financial Accounting, 7th ed., pp. 385-387, 470-472)

• The inventory valuation method that results in the lowest net income is the one that results in the highest of cost of goods sold. In a period of rising prices, LIFO (Last In First Out) results in the highest value of cost of goods sold. (Ref: Needles and Powers, Financial Accounting, 7th ed., pp.385-387)

• With LIFO, cost of goods sold will be higher and inventories lower. Therefore, the company will have:
o Higher cost of goods sold
o Lower net income
o Lower income taxes
o Lower current assets
(Ref: Needles and Powers, Financial Accounting, 7th ed., pp.385-387)

• If cost of goods sold is overstated, operating income will be understated.
Cost of goods sold = Cost of goods available for sale – ending inventory
Cost of goods sold = Beginning inventory + Inventory purchases – Ending inventory
If ending inventory is understated by $3,000, COGS (Cost of Goods Sold) will be overstated by $3,000 and operating income will be understated by $3,000. If beginning inventory is overstated by $5,000, COGS will be overstated by $5,000 and operating income will be understated by $5,000. The effect of both is to overstate COGS by $8,000 and understate operating income by $8,000. (Ref: Needles and Powers, Financial Accounting, 7th ed., pp.388-389)

• The term “market” refers to the current replacement cost of inventory, which is the amount that would be paid at present for the same goods. (Ref: Needles and Powers, Financial Accounting, 7th ed., p.390)

• Annual Depreciation = (Cost – Residual Value)/Estimated Useful Life
= ($30,000 - $5,000)/5
= $5,000
Carrying value after 2 years = $30,000 – (2 x $5,000)
= $20,000
(Ref: Needles and Powers, Financial Accounting, 7th ed., p.470)

• For the annual interest expense to reflect the effective interest rate, the interest expense each year must include a portion of the discount. This amortization of the discount is the difference between the actual interest payment and the (higher) interest expense for each period. (Ref: Needles and Powers, Financial Accounting, 7th ed., p.517)

• The purchase of treasury stock reduces both the assets (cash) and the stockholders’ equity of a company. (Ref: Needles and Powers, Financial Accounting, 7th ed., p.569)

• According to generally accepted accounting principles, gains and losses from discontinued operations should be reported separately on in the income statement. (Ref: Needles and Powers, Financial Accounting, 7th ed., pp.596,601)

• Cash collections from customers $260
Salaries Paid - 35
Cash Payments to suppliers - 85
Cash Payments for interest - 12
Cash flows from operating activities $128
(Ref: Needles and Powers, Financial Accounting, 7th ed., p.658-661)

• Sale of equipment $30
Purchase of land -8
Purchase of equipment -40
Cash flows from Investing -$18
(Ref: Needles and Powers, Financial Accounting, 7th ed., pp.638, 648-651)

• Payments to retire stock -$32
Payment of dividends -37
Cash flows from financing -$69
(Ref: Needles and Powers, Financial Accounting, 7th ed., p.639, 651-65)

• The basic balance sheet equation is Assets = Liabilities + Owner’s Equity
(Ref: White, Sondhi, Fried, Analysis and Use of Financial Statements, 2nd ed., p.16)

• Auditors are only required to verify there are no material errors.
(Ref: White, Sondhi, Fried, Analysis and Use of Financial Statements, 2nd ed., pp.24-25)

ECON

• Surplus of a good will create a downward pressure on the price, which will in turn induce buyers to purchase more, moving along the demand curve (a change in demand). (Ref: Gwartney Stroup, and Sobel, Economics: Private and Public Choice, 9th ed., pp.73-74)

• Gross private domestic investment is the only factor that reflects expenditures. (Ref: Gwartney Stroup, and Sobel, Economics: Private and Public Choice, 9th ed., pp.172-174)

• The Gross Domestic Product (GDP) deflator would be appropriate because it reflects movements in the prices of goods and services purchased businesses and governments as well as by consumers. (Ref: Gwartney Stroup, and Sobel, Economics: Private and Public Choice, 9th ed., pp.177-179)

• GDP includes all except household production. The omission of household production leads to the understatement of total output. (Ref: Gwartney Stroup, and Sobel, Economics: Private and Public Choice, 9th ed., pp.172-174, 180)

• Frictional unemployment counts only the number of qualified and employable workers who are in transition between jobs. This unemployment stems from the constant changes in the demand and supply of specific employers and employees, and the time required for job seekers to conduct job searches.
(Ref: Gwartney Stroup, and Sobel, Economics: Private and Public Choice, 9th ed., p.199)

• Inflation refers to the movement in the general level of prices of goods and services in an economy. (Ref: Gwartney Stroup, and Sobel, Economics: Private and Public Choice, 9th ed., p.205)

• Inflation rate = (this year’s Consumer Price index (CPI) – Last year’s CPI)/Last year’s CPI x 100
= (252 – 240)/240 x 100
= 5.0%
(Ref: Gwartney Stroup, and Sobel, Economics: Private and Public Choice, 9th ed., pp.205-206)

• Substantial inflation is normally associated with the economic condition identified as stagflation.
(Ref: Gwartney Stroup, and Sobel, Economics: Private and Public Choice, 9th ed., p.209)

• Inflation affects both product prices and resource prices. (Ref: Gwartney Stroup, and Sobel, Economics: Private and Public Choice, 9th ed., p.209)

• Changes in employment levels tend to reinforce, rather then dampen cyclical changes in economic activity. (Ref: Gwartney Stroup, and Sobel, Economics: Private and Public Choice, 9th ed., pp.261-262)

• Marginal Propensity to Consume (MPC) = Additional consumption/Additional income
= $3,000/$4,000
=0.75
(Ref: Gwartney Stroup, and Sobel, Economics: Private and Public Choice, 9th ed., pp.284-285)

• M = 1/ (1-MPC)
= 1/ (1-.80)
= 1/ (0.20)
= 5
Where M is the expenditure multiplier and MPC is the Marginal Propensity to Consume. An independent increase in investment expenditures of $10B would cause the equilibrium level of aggregate income to rise by 5 x $10B = $50B. (Ref: Gwartney Stroup, and Sobel, Economics: Private and Public Choice, 9th ed., pp.283-285)

• With more time to adjust to a price change caused by a shift in supply, buyers will identify more ways to respond to the unfavorable price movement. As a result, the change in quantity demanded will be smaller in the short run. (Ref: Gwartney Stroup, and Sobel, Economics: Private and Public Choice, 9th ed., pp.79-81)

• A change in the price of a good causes a movement along the demand curve, not a shift in the whole curve. (Ref: Gwartney Stroup, and Sobel, Economics: Private and Public Choice, 9th ed., pp.61-65)

• The absence of competition among sellers, resulting from monopoly power, would provide a basis for government action. (Ref: Gwartney Stroup, and Sobel, Economics: Private and Public Choice, 9th ed., pp.125-134)

MI

• The call features describes the terms under which the borrower can redeem bonds prior to the contracted maturity. (Ref: Reilly and Brown, Investment Analysis and Portfolio Management; 6th ed., p.81)

• Seniority describes the relative standing of the claims of different categories of bonds against he assets of a borrower in the event of default or bankruptcy. (Ref: Reilly and Brown, Investment Analysis and Portfolio Management; 6th ed., p.81)

• In a futures contract, all of the terms, including the delivery date and payment amount, are determined at the time the contract is bought or sold. (Ref: Reilly and Brown, Investment Analysis and Portfolio Management; 6th ed., p.86)

• A real estate investment trust fund is a vehicle for investing in real estate assets, either equity positions or mortgages. (Ref: Reilly and Brown, Investment Analysis and Portfolio Management; 6th ed., p.88)


CHOOSE TO BE RICH WORK BOOK
022208

Financial Goal

Secure

Pros
1. No more sleepless nights
2. A better mood
3. No more running around in circles looking for resources to survive for the day
4. The extra resources that you make can be used for achieving the level of comfort.

Cons
1. Not yet comfortable
2. Just surviving
3. Creates the feeling of that’s enough…
4. No budget for luxurious doodads

Comfort

Pros
1. Living in a big comfy house with 2 cars maybe…
2. Got extra time to do what you really want to do in life…
3. Can provide ample resources to advocacies that you believe in…
4. Extra resources to use to reach the next level of being rich…

Cons
1. Might get too much comfortable that you tend to stagnate…
2. Might possess too much credit due to the middle class mentality of purchasing doodads…
3. Might forget your advocacies and become greedy…
4. Prone to gambling, drinking, bad vices due to the extra resources available…

Rich

Pros
1. You can reach all of your goals in life…
2. Help the community without inhibitions…
3. Provide for your family generations and generations after…
4. Become a legend and leave a legacy…

Cons
1. Might get greedy and become an oligarch…
2. Life security…


I AM SO HAPPY AND GREATFUL NOW THAT…
022208

1. I am a millionaire!
2. I am a Certified Financial Analyst!
3. Everything’s gonna be alright!
4. Abundance, prosperity and health is mine!

QUESTS FOR FEBRUARY 2008!

021708
Day 2 of the Journey…

I’m the type of guy who loves to write his goals in life. I normally do annual goals, monthly and weekly goals…

This month my quest is entitled “LOVE, PEACE AND SUCCESS!

LOVE, PEACE AND SUCCESS!
FEB 08

I. Must Have
A. Johnnie Walker (Black)
B. Mangarina
C. Hugo Fragrance by Hugo Boss
D. Dep M Groom Gel
E. Puma Apparel

II. Readings
A. Start Chartered Financial Analyst (CFA) Review
B. Recitation of the The Ancient Scrolls (from the book “The Greatest Salesman in the World)
C. Continue reading and listening to “Choose to be Rich” book and audio cd supplement by Robert Kiyosaki

III. Savings – P145; Investments – P145; Tithes - P145 each

IV. Stabilize the Kooperatiba ng Kabataan para sa Kaunlaran Albay (Youth Cooperative for Development-Albay):
A. Fish Selling - Minimum net P1, 500
B. Food Cart - Minimum net P1,500
C. Sexxxy! Perfumes - Sell All!!!!
D. Others - Minimum net P1,500

V. Travel for intellectual and social pursuit

Additional Quests:

A. Finish “The Secret” Book
B. Deposit the correct 20% savings at Bank


The quest is entitled as such since its February, the month of love. Even though sometimes I find it corny but I still believe in the dictum of the bohemian revolutionaries – Truth, Beauty, Justice and Love.

Allow me to explain in detail each goal. The Must Have section pertains to my wants… my caprices, the doodads that I want to have. Actually I have more than 70 items in the Must Have list, but my target is to reach at least 44 of them this year. Below is my dream board consisting of the said items.



Regarding my readings, I have already started last year my self – review for the Chartered Financial Analyst (CFA) course (I will fully discuss what is a CFA on a separate blog). I have already made my new schedule for my self – review which entails 1.5 hours everyday:

February 11-17 Orientation and Diagnostics
February 18-24 Ethics and Professional Standards (1-4)
February 25- March 2 Quantitative Analysis (5-8)
March 3 - 9 Quantitative Analysis (9-12)
March 10 - 16 Economics (13-17)
March 18 - 23 Economics (18-23)
March 24 - 30 Economics (24-28)
March 31 – April 6 Financial Statement Analysis (29-31)
April 7 -13 Financial Statement Analysis (32-34)
April 14 - 20 Financial Statement Analysis (35-40)
April 21 -27 Financial Statement Analysis (41-43)
April 28 – May 4 Midterm
May 5 – 11 Corporate Finance (44-48)
May 12 – 18 Portfolio Management (49-51)
May 19 – 25 Equity (52-55)
May 26 – June 1 Equity (56-61)
June 2 – 8 Fixed Income (62-66)
June 9 – 15 Fixed Income (67-6)
June 16 – 22 Derivatives (70-75)
June 23 - 29 Alternative Investments
June 30 – July 6 Finals

The challenging part of doing a self – review is the sources of review materials. Enrolling in a review class is quite expensive, the review class at Asian Institute of Management costs P40,000+ (if my memory proves me right). Other than that, is the problem of my location (residing at Albay Province) only AIM has a review program for the said course. If ever I will enroll, I need to go to Manila every week to attend the once a week class, (whew! Additional costs). Then the exam fee for CFA Level I which is worth more or less $1,078! Whaaaaat?! Those are the challenges a CFA wannabe must face, we are only talking about the first level and there are three levels of CFA exam all in all. Still, it is my 2008 goal to take and pass the exam this December.
The recitation of the 10 Ancient Scrolls has been unsuccessful! Last February ? (I forgot the date) I was so drunk that I haven’t recited the “before you sleep” scroll! Too much alcohol is really a bummer! Fifty Percent of the “Choose to be Rich” of Robert Kiyosaki is already read and listened to.

The Third Quest which is an application of what I have learned from Kiyosaki. According to him, we must develop a mindset of savings, investments and tithes. You must have three piggy banks where you can put a certain amount every time you wake up. I have settled with P5 a day each piggy bank and it must never be moved until 90 days or three months. The money value might be small but the mind set that it will teach you will be a stepping stone to reach your financial goals in life.

The Fourth Quest is about the Youth Coop. A separate blog about it will be done in the future. As of now the coop have entered into MOA with the youth fisher folks of Albay West Coast regarding the distribution and marketing of the fishes the coop must earn a net of P1,500 minimum. It also partnered with a BUPC (Bicol University Polangui Campus) Professor regarding the production of Food Carts. As of now the food cart is not yet finished, the coop must earn a net of P1,500 minimum. The sales of the Sexxxy! Edt/perfume is the top priority of the coop for this month, the said perfume were processed by chosen Out of School Youth who attended workshops on perfume making at Manila and being marketed by college students. The others section is the processing and distribution processed meat like longganisa, baloney, skinless longganisa, tocino and embutido, they also process and market boneless bangus, relyenong bangus and lumpiang bangus, the loading station of the coop is a part of it also, again the coop must earn a net of P1,500 minimum.

Traveling for intellectual and socialization pursuit is the fifth quest. Actually I’m still in the dark regarding it. Where should I go? The budgetary requirements? Etc. Etc. I got this quest from my feng shui planner 2008.

Regarding the additional quests – I am still reading “The Secret” book by Rhonda Byrne; I need to deposit P3,453.4 (as of today) on my savings account, as of now I haven’t deposited even a single centavo yet.



CHOOSE TO BE RICH WORK BOOK


Financial Mistake

Trusting a friend (his name is Rhex Recomendable) with P50,000 that we have borrowed from my Grandmother. We are supposed to invest the said money in an MLM company. He invested it by himself. My team (Kuya Da, Kuya Ed, and Ate Zy) haven’t earned a dime and my grandma was fuming mad at me.

Lessons Learned

When it comes to money we must be cautious on entrusting it to someone. If ever you need to entrust it to someone have a black and white paper, document it.

Financial Mistake

Pawning one of your prized possession for an investment deal. I have pawned my original LG DVD Home Theater System for only P2,500 so the amount can be used for a concert at our town. Sad to say I haven’t got it back. I already gave my friend (Dandell – the one ho loaned it to his uncle) P2,500.

Lessons Learned

Every deal must be put into paper.

Financial Mistake

Having no savings. At this age of mine I have no savings! When something bad happens (I hope not) I will still look for resources… Ouch!

Lessons Learned

Save as early as you can. Save at least 20% of your earnings.

Financial Mistake

Spending money as if there is no tomorrow… One day millionaire! This was one of my habits… Whenever I have a big amount of money I tend to treat my troops, have party, drink all you can, etc etc…

Lessons Learned

Money is a living thing! It must be respected, it must be used wisely, it must be nurtured.
021708



I AM SO HAPPY AND GREATFUL NOW THAT…
021708
1. I am alive and kicking!
2. Surviving another week…
3. The coop have already sold approximately P1,000 load
4. MILLIONS ARE COMING!