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Thread: CFA L2 candidates

  1. #91
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    Quote Originally Posted by AnilK View Post
    Hello,

    This is in reference to the suggestion (approved by Team DG) on sharing and vali****** one's understanding of level 2 LOSs. Participants may volunteer to take up LOS that they would present. Team DG has kindly agreed to review the correctness of the presentation.

    I found the approach quite useful and efficient in acquiring and disseminating Business domains kniowledge for IT projects.

    I am awaiting the curriculum to arrive in 5-7 days and would start with economics or corporate finance depending on what I find myself comfortable with.

    I hope we all understand the spirit, but I'd still reiterate that understanding presentation needs to be in the presenter's words in as condensed form that it saves time of the members reading it but does not compromise on completeness. Ofcourse, one must try to mention points that one found useful in understanding and the doubts that one still has.

    Regards,
    Anil
    Great Initiative Anil!

    Keep it up...

  2. #92
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    Good job Anil. We look forward to lessons from u on Eco or Corp Finance.

  3. #93
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    Thnx Anil.

    I will try to do the same for Ethics and Quant section. But I'll do it after you complete your section

  4. #94
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    please do it for equity analysis as well

  5. #95
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    CFA Level 2 Errata

    There are some mistakes in the Level 2 books send by CFA Institute. They have published this errata:-
    http://www.cfainstitute.org/Eratta/2..._II_errata.pdf

  6. #96
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    Reading 32 - Corporate Governance (CG) - LOS 32.A

    What is CG?
    [FONT=Calibri][SIZE=3]Modern corporate form of business typically has many owners having proportional stakes who often don

  7. #97
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    Great job done Anil!!!

    Now I'll try to review an LOS soon.

  8. #98
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    LOS 32.B: Major Business Forms and conflicts of interest associated with each.

    Sole Proprietorship: The most common form and the easiest to set up. It is owned and operated by a single person. There is almost no distinction between the owner and the business and the owner assumes unlimited liabilities.
    As the business is typically owned and managed/operated by the same person, there is no conflict of interest in that respect. Even the conflict of interest between other stakeholders (e.g. creditors, suppliers) is limited.

    Partnerships: A partnership is similar to sole proprietorship except that there are more than one owners/managers. In contrast to sole proprietorship, the capital contributed and the business risk are pooled/shared by partners. Partners typically overcome conflicts of interest through partnership agreements specifying the partners’ rights and responsibilities.

    Corporations: Corporation is a separate legal entity and has rights and obligations similar to a person. Capital is contributed relatively large number of owners (shareholders). The liability of the owners is limited to the capital contributed (representing their proportional share in the net assets of the company). Managers/officers hired for the purpose act as agents of the owners to perform the activities of the business on behalf of the owners.

    Certain advantages of this form of business include ability to raise large amounts of capital, ability to engage professional managers & other experts and easy transferability of ownership interest leading to indefinite life of the business.

    Disadvantages include the complexity and formality in the structure due to the relatively larger size and the number of owners, difficulty on the part of shareholders monitoring the activities of the managers. Although the managers of the business are expected to act in the best interest of the corporation so that wealth of shareholders is maximized; more often than not the managers place their own interest before the interest of the shareholder. This is known as principal-agent problem or the agency problem.

  9. #99
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    Thank you Anil

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    Multiple Regression

    Multiple Regression is regression analysis using more than one independent variable. It helps to explain the influence of 2 or more independent variable on a dependent variable.

    t-statistic used to test the significance of individual coefficients in a multiple regression =
    (estimated regression coefficient - hypothesized value)/coefficient std error

    The p-value is the smallest level of significance for which the null hypothesis can be rejected.

    F-test explains how well the set of independent variables, as a group, explains the variation in the dependent variable.
    F-statistic = MSR/MSE = (RSS/k)/(SSE/n-k-1)

    Coefficient of Determination (R squared) = (Total variation - unexplained variation)/Total variation

    ANOVA provides info on the explanatory power of a regression.

    Heteroskedasticity - Not same error variance - Detected with Breusch-Pagan test - Corrected with White-corrected standard errors

    Autocorrelation - Correlation among error terms - Detected with Durbin-Watson test - Corrected with Hansen method

    Multicollinearity - High correlation among independent variables - Detected with significant F-test - Corrected by dropping one or more independent variable

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