CFA Level 2 2010

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104
Hi guys,
Taking the level 2 exam this year. I had a question regarding a corporate finance topic. Any help would be greatly appreciated:

In Schweser:
Corporate Finance > Capital Structure and Leverage (Study Session > Modigliani Miller Proposition 2 (No taxes)

The reading says, "we can see this by using the WACC formula and solving for cost of equity":

Re = WACC + (WACC - Rd)(Debt/Equity)

I feel like an idiot, but I can't wrap my head around the above algebra. How did they arrive at that formula for cost of equity?

Any help would be greatly appreciated. Thanks.


Dude..it comes from the equation

WACC=(equity/Value)(Re) +(debt/value)(rd)...where Value=Debt + Equity

consider equity/Value=We and debt/value=Wd

WACC=We*Re+Wd*Rd

WACC*1=We*Re+Wd*Rd

1=We+Wd

WACC(We+Wd)=We*Re+Wd*Rd

We*Re = WACC(We+Wd)-Wd*Rd

We*Re=WACC*We + (WACC-Rd)*Wd

Re = WACC + (WACC-Rd)*(Wd/We)

Re = WACC + (WACC-Rd)*(Debt/Equity)

Wd/We= (Debt/Value) / (equity/Value)
=Debt/Equity

I think u got it...ask if ny doubts:)
105

Hey thanks a lot man.. That's a huge help.
I have a feeling I'm going to have several questions over the next 6 weeks 😃

106

hey how was ur exam today?

107

how was ur exam today?

108

Quite cool...! But which exam u talkin about...?

109

m talkin bout Financial Management which i wrote today

110

hi friends.. I couldnt manage a good B school this year so now am continuing work with an IT MNC.
(its only been 5 months). So now i have to wait for a year to do MBA..So now am thinking of registering for CFA course ..so that i can learn finance and can have an edge in mba...but ive heard that cfa is good only after mba or ca or cs and its a polishing/value adding course..so will it still add value to me if i do it now..
shall i go for the cfa course..??
please guide..
sorry if ive posted in the wrong thread..i am new here.

111

Can anyone ping me the link for L2 Schweser notes ?

Or even better.. mail me the soft copy for the same ? The mail ID in this case will be [email protected]

Thanks

112

Guys, Please share your schweser PRO scores. I am taking test after I complete every Study Session. Have taken 7 till now ( Out of 18 ). I just cant score above 65 - 70 % in any of them. ( Difficuilty Level = basic + Inter + Advanced ). Please let me know your scores too.

113
koolleo87 Says
Guys, Please share your schweser PRO scores. I am taking test after I complete every Study Session. Have taken 7 till now ( Out of 18 ). I just cant score above 65 - 70 % in any of them. ( Difficuilty Level = basic + Inter + Advanced ). Please let me know your scores too.


Hi,
as only a month to go..what should be the approach now??

have you guys started taking schweser practice exams..those 6 sessions given??
please suggest
thanks
114
Hi,
as only a month to go..what should be the approach now??

have you guys started taking schweser practice exams..those 6 sessions given??
please suggest
thanks


Not practice exams. I have started giving Session wise Mocks in that software. Scores are drastically less than What I used to score in Level 1. Wanted to know if its normal or not.
115
koolleo87 Says
Not practice exams. I have started giving Session wise Mocks in that software. Scores are drastically less than What I used to score in Level 1. Wanted to know if its normal or not.


ohkay..thanks for replying
i didnt use the software in L1 and nor am planning to do it this time...some how i find practice exams better....
116
ohkay..thanks for replying
i didnt use the software in L1 and nor am planning to do it this time...some how i find practice exams better....


Practice exams are way better. I agree. But they are not of help till the entire syllabus is completed atleast once. Interim performance can be judged only by software though but in a rather crude way ( practice exams are the best AGNI PARIKSHA you can say ). Anyways, do let me know your scores on practice exams once you start. Any idea when will that be ??
117

i hope soon..bt dnt c dat happening before end of d month....will keep you posted

118

hey,are any of u guys solving the practice questions from the institute book?

and whats the best thing to do in these last few days?

119

Hi,

I have been taking the Schweser PRO tests for 1 week now and I am able to score between 70 - 75%. I have also been taking the Full length practice tests and have been scoring between 40 - 48 out of 60. It would be good to know about other performances, so we can compare.. thanks!

120
Hi,

I have been taking the Schweser PRO tests for 1 week now and I am able to score between 70 - 75%. I have also been taking the Full length practice tests and have been scoring between 40 - 48 out of 60. It would be good to know about other performances, so we can compare.. thanks!



I have been taking study session wise schweser PRO tests and scoring about 68 - 70 % individually. So I should expect anywhere around 65 % if I had to take a full length test encompassing all subjects.
121

hey...wat are schweser PRO test...what are you guys talking about..d ones at the end of each chapter?

122
Tanika Nangia Says
hey...wat are schweser PRO test...what are you guys talking about..d ones at the end of each chapter?


Schweser Question BAnk. The software.
123
koolleo87 Says
I have been taking study session wise schweser PRO tests and scoring about 68 - 70 % individually. So I should expect anywhere around 65 % if I had to take a full length test encompassing all subjects.


Do let me know your score once you take the full length practice tests...