Hi,
I am planning for CFA L-1 in december. can someone resolve my doubts about CFA. TIA.
1. If I clear CFA dec, can I appear for level 2 in june and level 3 in next dec ?
2. I am doing MBA now, suppose I do not chose job in core finance sector then will my experiance of 4 years in some other sector be considered and I will be certified as a CFA or it will be cancelled.
@lokesh123 level 2 and level 3 are only in june (not in dec).
as far as i know experience in some other sector is considered irrelevant.
@Nirmal_Analyst said:CFA level 1 question for 29-March-2013Nestle Ltd reported a net profit of Rs.9620 million for the year ending December 2011. At the start of 2011 the company had 48.2 million shares outstanding. The company issued a 1:1 bonus on 1-July-2011. The company also had 5 million ESOPs outstanding at an exercise price of Rs.7000/share (at the start of the year) throughout the year. Nestle €™s closing share price on 31-December-2011 was Rs.4500/share and average share price (adjusted for bonus) during the year was Rs.4300/share. Calculate the diluted EPS for the company.A.Rs.129.72B.Rs.133.06C.Rs.94.64
Ans A:
Pre-bonus shares: 48.2*12 months =578.4
Post Bonus shares: 48.2* 6 months=289.2
Weighted average shares outstanding = (578.4 + 289.2)/12 = 72.3 mn
Post bonus the ESOP will become 10 million shares (5 million adjusted for 1:1 bonus) outstanding with a strike price of Rs.3500 (i.e 7000/2)
By treasury stock method, if 10 million options were exercised company would receive
10*3500= 35000mn. Using this company can buy shares at Rs.4300 (average price). i.e 35000/4300=8.14 mn shares. So dilutive shares added would be 10 €“ 8.14 =1.86 mn.
Total shares to be used for calculating diluted EPS = 72.3+1.86 = 74.16 mn.
Diluted EPS = 9620/74.16 = 129.72
Pre-bonus shares: 48.2*12 months =578.4
Post Bonus shares: 48.2* 6 months=289.2
Weighted average shares outstanding = (578.4 + 289.2)/12 = 72.3 mn
Post bonus the ESOP will become 10 million shares (5 million adjusted for 1:1 bonus) outstanding with a strike price of Rs.3500 (i.e 7000/2)
By treasury stock method, if 10 million options were exercised company would receive
10*3500= 35000mn. Using this company can buy shares at Rs.4300 (average price). i.e 35000/4300=8.14 mn shares. So dilutive shares added would be 10 €“ 8.14 =1.86 mn.
Total shares to be used for calculating diluted EPS = 72.3+1.86 = 74.16 mn.
Diluted EPS = 9620/74.16 = 129.72
CFA level 1 question for 01-April-2013
Hayden and Gill were discussing about effect of ESOPs on accounting statements and they made the following statements
Hayden: Companies can get tax benefits when ESOPs are exercised which will be shown as part of operational activities. This may artificially increase the effective tax rate of the company which an analyst should adjust for analytic purpose.
Gill: It is an irony that while money spent on stock buyback for issuing during exercise of ESOP is considered as financing cash flow the tax benefit arising out of this is considered as operational cash flow. This is results in a situation wherein more is the difference between ESOP strike price and actual stock price more will be the operational cash flow of the company.
a) Both are wrong
b) Only Hayden is wrong
c) Only Gill is wrong
Hayden and Gill were discussing about effect of ESOPs on accounting statements and they made the following statements
Hayden: Companies can get tax benefits when ESOPs are exercised which will be shown as part of operational activities. This may artificially increase the effective tax rate of the company which an analyst should adjust for analytic purpose.
Gill: It is an irony that while money spent on stock buyback for issuing during exercise of ESOP is considered as financing cash flow the tax benefit arising out of this is considered as operational cash flow. This is results in a situation wherein more is the difference between ESOP strike price and actual stock price more will be the operational cash flow of the company.
a) Both are wrong
b) Only Hayden is wrong
c) Only Gill is wrong
@ambitiousviolet said:@nits2811 but i heard that pro has some more features the normal one...which one would be useful more and also the same calc will be helpful for all 3 levels as well ?
yess ...but those features are not reqd imo....pro is basically for high level professionals...but if u want u can use it as well...i feel ba 2 plus is more than sufficient for all the 3 levels...visit the texas instruments site to kno the diffs exactly...and i blv if u are going for dec xam..than u may will require calci straight away...i am giving in june...except for few readings...i never felt the use of ba 2 plus even (using 991 MS)..i havent bought it as of yet...but will buy ba 2 plus only...
@anupam001 if u cld help...
Startin for prep from tomorrow! Can i still make it?
Yeah Kinda!
guys, can anyone tell me whats the differecne between tax base and taxable income?
are they same?
Are edupristine notes good for summarized last minute revisions? Since I started late, a few weeks back, I am looking for condensed contents. any advice? anyone?
@ambitiousviolet said:@nits2811 but i heard that pro has some more features the normal one...which one would be useful more and also the same calc will be helpful for all 3 levels as well ?
@nits2811 said:yess ...but those features are not reqd imo....pro is basically for high level professionals...but if u want u can use it as well...i feel ba 2 plus is more than sufficient for all the 3 levels...visit the texas instruments site to kno the diffs exactly...and i blv if u are going for dec xam..than u may will require calci straight away...i am giving in june...except for few readings...i never felt the use of ba 2 plus even (using 991 MS)..i havent bought it as of yet...but will buy ba 2 plus only...@anupam001 if u cld help...
i have use BA2plus for clearing l1 and l2 and didn't face any issue..don't think prof one is required for l3 also
@Nirmal_Analyst said:CFA level question for 30-Mar-13Demo Ltd reported an EPS of Rs.140 last year. The company €™s book value per share is Rs.700. The company retained Rs.60 and paid the rest as dividend. The company is expected to maintain it dividend pay out policy. If the company €™s cost of equity is 11% the intrinsic value of the share should be closest toa. Rs.282b. Rs.3200c. Rs.3576
RoE = EPS / Book value per share = 140/700 = 20%
Retention Ratio (R) = Retained earnings per share / EPS = 60/140 = 42.86%
Growth (g) = RoE * retention rate = 8.57%
Cost of equity (k) = 11%
Intrinsic value ( as per DDM) = Dividend * (1+g) / (k-g)
= 80 *(1+8.57%)/ (11%-8.57%) = Rs.3576.47
Retention Ratio (R) = Retained earnings per share / EPS = 60/140 = 42.86%
Growth (g) = RoE * retention rate = 8.57%
Cost of equity (k) = 11%
Intrinsic value ( as per DDM) = Dividend * (1+g) / (k-g)
= 80 *(1+8.57%)/ (11%-8.57%) = Rs.3576.47
@FRM_Dood said:guys, can anyone tell me whats the differecne between tax base and taxable income?are they same?
@FRM_Dood Tax base is the value of an asset or liability that can be subjected to tax. For example if you have an asset with original cost of Rs.600 and for tax purpose this is being depreciated on DDB method. Lets us say the accumulated DDB us Rs.150, then your tax base is Rs.600-150= Rs.450. Remember tax base can be different from Carrying value of the same asset. Let us say the same asset is being depreciated on SL basis for accounting purpose and the accumulated depreciation is Rs.100. Then carrying value of the same asset is Rs.600-100 = Rs.500.
Taxable income is simply the amount of income that can be subjected to tax.
CFA level 1 question for 02-Apr-13
MoSt Ltd offers pension on Defined benefit plan to its employees. Currently it reported pension liabilities of Rs. 250 crs. If the company revises it return expectations of its pension fund to 8% from current 7% then
a)The pension liabilities will increase above Rs.250 crs
b)The Pension liabilities will remain at Rs.250 crs
c)The pension liabilities will decrease below Rs.250 crs
MoSt Ltd offers pension on Defined benefit plan to its employees. Currently it reported pension liabilities of Rs. 250 crs. If the company revises it return expectations of its pension fund to 8% from current 7% then
a)The pension liabilities will increase above Rs.250 crs
b)The Pension liabilities will remain at Rs.250 crs
c)The pension liabilities will decrease below Rs.250 crs
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@ambitiousviolet said:@nits2811@anupam001 thanks both of you i will buy the ba 2 plus only then however any idea about where to buy material from -laxmi or om ? also i have heard for l-1 schweser notes are more then enough is it so ? wud cfai notes be of more use.. how helpful it is ...i am asking this so i can decide upon whether to buy ebook or print material?
i bought from laxmi xerox..the quality was fine..no idea about om..i didn't touch CFA books for both L1 and L2 and i won't recommend studying from CFA books for L1...schweser has all the data which is required..if you intend to use CFA books then purchase the print but if u r planning to study from schweser then u can go for the ebook format.