Kaplan Mock 5 Am Pt 1

the performance of assets under the sub-advisor's control must be included in the performance of the firm's composite for those assets.

This is a CLEAR records retention violation.

The standard requires members to maintain research records that support the reasons for the analysts conclusions and any investment action taken. All communications with clients must be maintained as well.

Make sure when you see a record retention question, you differentiate whether it is asking about the length of time records need to be kept or if they need to be kept at all.

She needs to re-create the analysis documentation supporting her recommendation USING publicly available information and/or information from her new firm.

SHE CANNOT RELY on memory or materials created at her previous firm

liquidity- refers to a clients ability to exit an investment product readily without experiencing a significant cost from doing so.

Capacity - refers to an investments ability to take on additional investment without reducing its capacity to earn returns

Check references

Give employees a list of possible violations and sanctions (including dismissal)

Develop/adopt a code of ethics... make clear it will be enforced

NO! for Due diligence and reasonable basis, YOU ARE ALLOWED TO RELY ON YOUR FIRM'S RESEARCH. THIS IS ACCEPTABLE AND NOT A VIOLATION

The key statement is "Based on her firms research" this satisfies the requirement for due diligence

This is a case of an analyst using the firms product as research into the firm. The promotion is available to all analysts not just him. If they were offering to fly him out first class to inspect their new jet making facility, that would constitute using corporate aircraft when there is an alternative and go against recommendations. He is sampling the product with no other compensation ro anything that may compromise his ability to maintain independence.

YOU CAN NEVER NEVER NEVER PARTICPATE IN AN OVERSIBSCRIBED IPO

THE VERY DEFINITION OV OVERSUBSCRIBED MEANS **** OFF LIMITS TO CFAS ***

recommended but not required to restrict employee participation in IPO's/private placements

recommended but not required to require pre-approval before participating in either

"Past Performance does not guarantee future return."

Under Performance Presentation you must ensure the accuracy, fairness, and completeness of performance presentations. The standard explicitly prohibits members from implying that future investment returns will reflect past performance. By trying to validate forecasted future return numbers by pointing to past data and saying "see look past performance backs this up!" is doing just that

Include terminated accounts as part of historical performance and clearly state when they were terminated

They may provide temporary and limited assistance under tight controls.

Some member and situations allow for a CFA to be involved in transactions that provide them with NonPublic Material Information. They must use this information for its intended purpose and no other purpose until it is made public.

Statement 1: Cannot claim make promotional promises that imply the ability to achieve superior returns because of the CFA designation.

Statement 2: You cannot put periods after each letter of the CFA, you cannot have the designation be in bold, and it cannot be in a larger font than your name because You are not allowed to alter the CFA mark

"if the sample mean equals the population mean, there is no sampling error associated with this sample"

Sampling error occurs if any of the sample parameters in a sample do not equal their respective population parameters. While there may be no difference between sample and population mean, There could very well be sampling error between sample SD and Pop SD, meaning that you cannot rule out sampling error based on one parameter

Confidence intervals for a population mean based on a sample are constructed by multiplying the standard error of a point estimate by a reliability factor, and adding this value to, and subtracting it from, the point estimate.

The p-value equals the probability that the null hypothesis is true.

The decision rule is to reject the null hypothesis whenever the p-value is less than the significance level.

You accept the null hypothesis because pvalue is higher than lvl of sig

These test often transform the data into Ranks or signs. (based on an increase or a decrease) then attempt to run tests on the changing relationship between ranks or finding patterns in the changing signs

t test, chi squared test, F-test

SR for Perf Comp firm

Supply curve is Upwards sloping bc price increases will cause firms to produce more Demand is Horizontal bc firms are price takers

Monopoly demand curve is downwards sloping

exports become more less expensive to foreign customers because $100 usd in goods requires less of the foreign currency. Foreign goods become more expensive to domestic buyers. Exports rise import decrease which moves current account towards a surplus, which boosts aggregate demand

5.3%

"PKR is trading at an annual premium of 2.3% relative to the VKN in the forward market."

= PKR is trading at a forward premium to VKN

PKR goes in the denominator. Solve

In the Heckscher-Ohlin model, trade results in a redistribution of wealth within each country between workers and the owners of capital. The price of the relatively less scarce (more available) factor of production in each country will increase and cause redistribution of income toward that factor (to workers in a country with a comparative advantage in labor-intensive goods, and to owners of capital in a country with a comparative advantage in capital-intensive goods).

Labor

The quantity of output at which short-run marginal cost of production is minimized is the same quantity at which the marginal product of inputs (e.g., labor) is maximized.

Neither IFRS nor U.S. GAAP specifies a required number of years of comparative financial information.

Both IFRS and U.S. GAAP allow deferred taxes to be presented as noncurrent on the balance sheet. However, U.S. GAAP classification depends on whether the underlying asset or liability is current or noncurrent. IFRS requires deferred taxes to be presented as noncurrent and under certain circumstances allows them to be netted on the balance sheet.

U.S. GAAP requires that deferred taxes be measured using an enacted tax rate, while IFRS allows measurement using an enacted or substantially enacted tax rate.

CFI includes capital expenditures, the investment in a joint venture, and acquisitions: -100 - 40 - 80 = -220. The dividend from affiliates is included in operating cash flow. CFF is equal to total cash flow minus CFO minus CFI: 340 - 210 - (-220) = 350.

Purchase cost

Conversion cost

Allocation of fixed production overhead based on normal capacity levels

Other costs necessary to bring the inventory to its present location

unallocated overhead,

abnormal waste,

most storage costs,

admin and selling costs

Decreases Debt to assets

Credit downgrade means market value goes down, which means that book value of debt on BS goes down

under US GAAP, long lived assets cannot be revalued upwards, except that Held for Sale assets can be revalued upwards to the extent of previous impairments

recognize loss of 200K, decrease SHEquity 400K

PPE Land valued above historical cost means it is using fair value method and has been revalued upwards(must be ifrs). That 200K would hit SHE as a revaluation surplus.. The drop in fair value to 1.8M means the revaluation surplus would be depleted, and the amount revalued to below historical cost hits income statement as a loss. The -200k from reval surplus and the -200k from net income means equity goes down -400K

Under IFRS but not USGAAP property a firm holds for capital appreciation and income is classified as Investment property can be valued using Fair Value Model and Cost model.

investment property revalued above historical cost recognizes those gains on the income statement

PPE land revalued above historical cost is recognized in equity as revaluation surplus`

When a depreciable asset is revalued uwpwards and the depreciable base becomes larger. Depreciation will be greater in later periods and reduce net income

Under IFRS, inventory can be written up when NRV increases but cannot be carried at an amount greater than cost

Aka SPECIFIC TO INVENTORY you can only revalue to reverse a previously recognized write down

Book Value (on balance sheet)

- Cash Paid

= Gain/(loss)

- Unamortized issuance costs (Under GAAP only)

= Gain/(loss) on repurchase

IFRS: Issuance costs are deducted from the proceeds of the debt offering and are accounted for in Book Value of debt

GAAP: becomes a prepaid asset and is amortized over life of bond

When presenting using indirect method,

Any gain on early retirement is subtracted from NI to find CFO

Redemption price is reported as an outflow from financing activities

eliminate the gain or loss from the income statement

Cash Flow from Operations / Revenue

CFO/Revenue

NOT TOTAL CASH FLOW