Highway to CFA

Level II - The journey begins

2009-08-08T20:05:00.002+05:30

Back again with a $620 charge on my credit card for the level II curriculum. Got a shipment confirmation email from UPS. Hopefully the end shall be the same.

Note: I promise to be more regular on this blog from hereon :)

Passed

2009-01-28T20:06:00.001+05:30

I passed ... I passed ... I passed .... more later... just happy for now :)

RnR.....Results & Recap

2009-01-26T11:28:00.001+05:30

It's a little under 36 hours for the results and I'm beginnnig to feel anxious and nervous. I can't help thinking of what the results hold in store for me.

Have I reached that "Minimum Passing Score (MPS)" and shall move on to level II in June 2010 or is it back to reading the books for me for December 2009. Will I look at the words "Congratulations!! we are glad to inform you that..." or will it be "We regret to inform you that..."

After spending hours trawling through various web forums, reliving the exam papers & conversations post exam in my mind and falling for the "Results are postponed because the IT head of the CFAI had a fishing accident" prank (damn!!); I figured that I should best utilise this time to recap my experiences during the entire journey to the exam. The idea is to put my mind to do something constructive and document some best practices for posterity. So here goes...

1. Focus on the concepts and not the mechanics

This fact is well documented in the CFAI page on the learning outcome statements and like most often stated things in life is the most underrated. Get this into your head people - The exam is about how well you are able to understand the concepts and apply them as opposed to "learning by rote" or lengthy calculations. Just memorising a method of calculating an answer won't help. You have to think..."This is the info that I have...this is the answer I need to find...hence i need to do these interim steps because 1 leads to the other and so on". A classic example of this is being asked to calculate one of the interim outputs of DuPont equation with only enough info to calculate some of the inputs; i.e. you won't get EBIT or ROA but have to work them out.

Any yes... you need to know the concepts and the basics to be able to eliminate redundant data; Eg. Under US GAAP are dividend payments a cash flow from operating activity or from financing (just memorising them won't help as there are too many such intricacies; you need to be able to understand the logic behind them.

2. Don't forget the little ones

The way most of us approach planning a study session is that we try to identify those topics that have a large weightage in the exam (click here for the topic area weights) and go after them. Nothing wrong with this except that Mr. Murphy make's an appearance and you end up neglecting the topics that have 3 to 5 percentage weighting. WRONG thing to do!!!!

That's because these topics have only the basics covered (the intricacies are for subsequent levels) and by not reading them you are giving away easy wins and you really don't know how they make up the MPS. So don't foret the little ones :)

3. Finish it now

I've had this thought while preparing for the many exams that I've appeared for over the years (engineering, MBA et all) "This is a bit too complicated... Let me park this for now and I'll come back to it later". I'm sure everyone's realised that it doesn't happen. Granted that a particular section or a topic area may seem complicated at first but there's no reason it will be any simpler if you read it 2 weeks prior to the exam.

The best thing to do is to read the topic once....solve the questions at the back of the book and chalk some time in your study schedule for a 2nd and more comprehensive revision.

4. Ethics Ethics Ethics

The institute website says it...the web forums say it... anyone who's taken the exam say's it and it's true. Ethics is the most important topic and you cannot afford to take it lightly. The tendency is to start with it as it seem's like the easiet thing "It's only reading man" but it's also the topic with the most twists.

The best way to do this is to read through the institute notes, make your own notes with regards to what a standard cover's and more importantly what it DOES NOT cover and get as many practice questions as possible. There are enough free resources available online as well as a large number of question banks that you can spring for. Spend the money guys it'll be well worth it.

5. Practice

The best way to know the concepts is to apply them. You can study from the institute notes or any of the preparatory notes avaialable...I'd suggest you keep one source of notes as primary with a secondary source for the more difficult topics. I used the institute notes as my primary source.

But the same approach does not apply when getting some practice exams/revision questions. Get as much practice as you can. After finishing a topic be sure to solve the questions at the back of all the notes that you have. If I pass this shall be the single most important reason for me passing.

6. Revision & Mock Exams

Ideally you should wrap up the curriculum 30-45 days (preferably 45) prior to the exam date. Assuming you aren't one of those blessed with photographic memory and most of what you would have learnt 4-5 months ago has been banished from your memory.

So give yourself 15 days for revision and then start on the mock exams.

The first mock should be split over a period of 3-4 days. Take the 1st mock and identify your weak areas; work on them and then go in for the 2nd mock. It's important that while grading each exam you make a list of topics / concepts / questions where you went wrong. This should serve as a basis for your revision in the final week.

Phew!! That's a long post. I certainly feel better after typing this text out. Methinks that I'll put up another post with some tips for exam day in sometime.

Travel Travails...

2008-11-01T23:24:00.004+05:30

On October 9th a seemingly innocuous mail from the CFA Institute showed up in my inbox titled "CFA Exam Update". The court hearing about the case between the ICFAI and the CFA Institute (I don't intend to go into the details of the court case here or anywhere) had already been postponed 2 times and the airfares between Mumbai - Singapore / B'lore S'pore even on Tiger airways seemd to move with perfect negative correlation to the stock markets

Prashanth and I had received a confirmation of a change in test center to Nepal a couple of days prior to this and decided to get cracking on the tickets et all..

After doing the rounds of travel agents, websites like et all it boiled down to 3 options

1. Bombay - Gorakhpur (train), by road to the border, walk across and take a 6 hour bus journey to Kathmandu

Cost - Cheapest (~Rs. 3000), Time taken - longest (~3 days each way), Chances of being stuck in a landslide - Highest

2. Bombay - Delhi flight followed by Delhi - Kat flight

Cost - Most expensive (~Rs. 25000), Time taken - Shortest (<24 hours), Chances of being stuck in a landslide - negligible :D

3. Bombay - Delhi (Train), followed by Delhi - Kat flight - Indian was full and Jetlite was the next cheapest option here. I had been warned by a few people against Royal Nepal

Cost - Moderate (~Rs. 15000), Time taken - Moderate (<36 hours), Chances of being stuck in a landslide - Minor (only while entrained)

Needless to say it was option 3 that we chose. So then people it's all done. Train tickets through IRCTC (man this site is really good when it works) & Jelite flight tickets through an agent.

Hotel bookings for ~1200 INR including taxes though no breakfast. Now I need to go to the mattresses and pray that my name is among those who are in the 35% pass rate :)

Wish me luck people!

CBOK, Study sessions, Reading assignments et all

2008-09-10T22:19:00.003+05:30

Ok so you've filled out the forms online and registered for the exams by paying USD 1,000 or INR 43,000 (gulp!!) or thereabouts for the exam. You've even managed to find the link to the Learning Outcome Statements (LOS) for each study session which is a 42 page document that tells you what exactly are you supposed to be able to accomplish at the end of each study session(?). And even the 19Kg packet has come home courtesy UPS. So how does this all stack up?

I like to think of myself as a big-picture guy :) meaning that I hate doing something till I don't understand the big picture behind it. Understanding the "big picture" may not be of too much help to most people which is ok (to each his own and all of that) but it does help put things in perspective. So here's my take on what I've gotten myself into.

To be awarded teh CFA charter which allows you the rigth to use the CFA designation you need to: (a) Pass the 3 exams and (b) Meet the professional & ethical requirements. Let's talk about a for now.

The 3 exams are based on a curriculum called the candidate body of knowledge (CBOK) which is determined by the institute through a practice analysis survey of professionals around the world. This CBOK covers 10 areas each which are listed here. These topics are tested in the 3 exams in a different level of detail. The approximate weights that each of these topics carry in each of the exams can be found here. One thing that immediately strikes you is that no particular area has unduly high or low scores which means that you cannot afford to leave any 1 section out completely. Being an engineer I know for a fact that an equal amount of time if not more is spent on pouring through the past years papers to determine which topics have been glossed over historically. Alas, those days are no more :(

Here's a bit of statistic that I found most interesting. The pass percentage is 35% (man that's lower than my favorite number 40 from engineering :P). A candidate can pass the exams in about 18 months but it takes on an average of 4 years to pass them all with 6 months of study on an average for each exam.

So here are the numbers (and my attempts to align them to the Indian education system in brackets)

1 CFA charter (the degree)

3 exams to pass (the 3 exams to pass)

10 topic areas for each exam (10 subjects that stay the same :(( )

Level 1 has 18 study sessions (18 text books)

which are divided into 76 readings (that have 76 chapters)

10-15 hours of study per week for 18 weeks (no study leave)

250-350 hours of studying (same as above)

0 social life and loads of prayer and good luck to boot :)

In case you're wondering about the LOS; I would akin them to the Syllabus that is available for each exam we used to give in college.

Well, now that the big picture is crystal clear let's hit the books :D

Cheers till next time.

First Gear

2008-08-13T20:33:00.006+05:30

I am one of the recent entrants to the long line hopefuls in a quest for the Chartered Financial Analyst (CFA) charter offered by the AIMR, USA. Thought it would be interesting to blog about my experiences, learnings and any tips that I pick up along the way.

Something about my background while we're in the introductory phase. With regards to education I've earned a degree in Electronics Engineering from TSEC, Mumbai (those who know me from those days will testify that me getting the degree is nothing short of a miracle), though like the vast majority of engineers I realised a couple of years into it that a life of writing code or designing circuits is not for me. After shuttling through small-time jobs for a year I managed an admit to the 2 year full-time PDGBM program of Sydenham Institute of Management Studies, Research and Entrepreneurship Education (SIMSREE) with a major in Finance that ended with me being placed in the treasury sales function of one of India's largest private banks and based out of India's Orange City Nagpur.

My professional career got off to an awesome start with me landing in a strange city which I could barely locate on a map though it turned out to be one of the most awesome experiences of my life both work-wise and partying wise :). The partying was in a large part due to my passion for motorcycle riding and the brothers of Wanderlust MC, Nagpur. There's more on my passion for motorcycle riding here. Add to that my job required me to travel for 20 days a month across Vidarbh, M.P. and Chattisgargh. The experience of living alone for the first time, travelling to different locations and selling currency derivatives was definetly and eye opener.

Moved on to a job in strategy planning for one of India's largest Telcos and into a completely different world of vision, mission, business modelling, valuation and the like. Somewhere along this path I decided to get the CFA charter to fill in gaps in knowledge, learn the nitty gritties of what I had glossed over in B-School and get a cool CFA designation to boot :)

The idea of this blog came as my previous attempts at blogging have resulted in nought for want of having anything interesting to post on a regular basis.

Blogging about this should be fun methinks. Watch this space...