AuthorTopic: June Level 2 Exam Feedback
@2007-06-02 19:39:09
Hey guys,

What did you think of the 2nd level? My impression was that the AM session was feasible but the PM session sucked big time! I had no idea where some of those questions were coming from?

Now if you say you buggered the PM session as well, that would give me at least a bit of hope, haha :)

@2007-06-02 22:47:25
I felt the exam was reasonable, and personally I did not feel much difference between morning and afternoon sessions. Luckily, not much of portfolio management, as many candidates assume they know this area well (while that is not so).

In general not too many calculations, and even swap and options basic formulas were given in the exam paper! There was only a couple of questions with intense calculations (keyboard exercise).

I heard quite a few people could not match the FCFF and FCFE results to the possible answers (afternoon sessions, q 100 and 101).

Anyone else had something similar?
@2007-06-02 23:04:18
Peter, I thought the opposite. I thought the PM was easier than the AM. The morning had far more questions that required calculations (time consuming). The afternoon questions were more qualitative (shorter). What were the difficult topics that you can remember from the afternoon session (and the morning session too)?
@2007-06-02 23:09:30
It's hard no doubt, and weird questions, never saw anywhere before.......Both session had sucked.....
@2007-06-02 23:37:50
yeah, i think the same way too
@2007-06-03 04:13:47
I found the second paper more quantitative which I must say suited me. I found first paper ok except for question on Traynor Black model which I wasn't particularly prepared for. I though accounting questions were particularly do-able. There were a lot of questions on the first paper which required getting two facts correct and some of the questions (theoretical) I found abstract and I felt I was guessing these.... Would appreciate feedback from others!!!
@2007-06-03 12:56:15
I struggled with the FCFF and FCFE Qs as well until I re-read the question and realized that it asked for the per share figure. Struggled on the Franchise P/E Q in the AM.

Had to 50/50 guess a hell of alot of the qualitative questions - found the questions and text ambiguous and vague a great deal of time. Very frustrating. Also can anyone tell me if there is such a thing as 'idiosyncratic risk'?
@2007-06-03 14:22:09
I agree this exam was really different. It doesn't feel so bad if it's like I've studied them but forgotten the details during the exam and made silly mistakes. The fact is, I've never come across those materials tested before! Probably they gave us level 3 questions....
@2007-06-03 15:39:37
Crap, seems like I really buggered the 2nd paper then. As Andy says, I check the cover of the PM session a few times cos I too thought they gave me L3 exam...

As for questions I found difficult- I had no idea about how to find duration of the 3 bond portfolios and find out which one's more valuable or something. Do you know which questions I mean? Also, I struggeled with wording of some questions. I knew the concepts but couldn't understand some of the given statements.

Oh yeah, and what about one of the 1st questions in the PM sessions- Is offering of hedge funds to conservative clients breach of CFA standards?
@2007-06-03 19:10:46
if I am sure in 65% questions, does it mean I have a chance to pass?
@2007-06-03 21:05:47
I had FCFE/FCFF problems as well. Looking back, I made some stupid mistakes here and there, but overall, I feel like I did well enough to pass. All of the 'easy' subjects were harder than I expected (Ethics, PM) and the harder ones much easier (paricularly FSA and Econ (no Fisher/Exchange Rate!)). I expect to pass, but would not be shocked if I fell a little short.
@2007-06-04 06:04:35
To Peter, I thought hedge fund recommendation was based on the analyst's thorough study and investors' requests, so it is appropriate to conservative investors even if it 's quite a risky instrument..
@2007-06-04 06:41:28
"I had no idea about how to find duration of the 3 bond portfolios and find out which one's more valuable or something. Do you know which questions I mean?".

The key to this question was noticing that the bonds were all pure discount notes with no interim cash flows. A zero coupon bond's duration is approximately equal to its maturity. The portfolio duration is equal to the weighted average maturity of the bonds.
@2007-06-04 15:47:40
The PM session seemed easier for me. I did ok on the first part of the AM session, but than franchise P/E question, threw me off and gave me a mini panic attack. Also, Traynor Black questions in the morning session were something else, in the assigned readings they specifically said that you don't need to know the formulas for TB, but then questions tested your thorough understanding of the formulas, and they gave a whole vignette on this. I was able to get both FCFF and FCFE questions, but that took some time.

To mattb question about idiosyncratic risk, idiosyncratic means firm specific or diversifiable. This term comes straight from PM chapters in CFAI readings, they used it there in quite a few places.
@2007-06-04 19:57:44
I found the morning session was considerably more difficult than the afternoon session. In the morning I wasted a lot of time calculating the Corporate Finance question (the one about two potential projects that have different lives). Ironically, I know how to calculate that material quite well, but during the test none of my answers matched the choices. I ended up digging myself into a hole and having to hurry to make up time. Same for the Franchise P/E question (though I know that formula like the back of my hand). I also thought the quant question was tricky (was that the AM or PM session? I can't remember). The stuff I thought might be hard (FSA pensions and multinational investments) ended up being pretty straightforward.

I felt a little unsettled at lunch time because I had to guess at too many questions in the morning.

In the afternoon, however, I thought I did very well. I finished with plenty of time to spare, and that allowed me to go back to the questions on FCFF and FCFE. I was able to get the answer to the FCFE question, though it took me considerable time. I never did get the answer to the FCFF question, and I simply guessed the answer.

I thought the afternoon Ethics question was tough.

The duration question asked us to recognize that the portfolio with the 2-year strip had sensitivity to changes in the 2-year rate, while the other portfolios did not.

Idiosyncratic risk is the same as unsystematic risk or diversifiable risk.

Fingers crossed for the results...
@2007-06-04 20:34:48
I thought the afternoon section was much harder. Completely agree with the person who started this topic. I felt some questions were a little repetetive. You HAD to know how bond's interest rate risk affects ratios and cash flows. If you didn't - there goes at least 3-4 questions. It was a little unfair, I thought.

Otherwise, afternoon session was just a lot harder if every respect. If Ethics questions were longer and more ambiguous. MHO (my humble opinion)
@2007-06-11 18:02:20
I plan to take level 2 next June.

Any recommendation about best combination of prep materials?
@2007-08-16 21:32:37
Hey dudes! I passed the 2nd level!! Woooohooooo, I'm so happy!! Love you all ;)

How did you guys do?
@2009-10-31 06:56:24
Thank you! Very useful!
@2009-11-10 11:45:58
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CFA Discussion Topic: June Level 2 Exam Feedback

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Craig Baugh