CFA Level II (June 2011 Exam) - Errata

[1] CFA PROGRAM CURRICULUM
CFA Institute - Errata

VOLUME 1 - Ethical And Professional Standards, Quantitative Methods, and Economics
p.23
(Original) Member resides in LS country, does business in MS country; LS law applies,
(Correct) Member resides in LS country, does business in MS country; MS law applies,

p.176
(Original) Answer C is also consistent with the Standards
(Correct) Answer C is not consistent with the Standards

p.347 13.E
(Original) The coefficient of variation, the R-squared, is
(Correct) The coefficient of determination, the R-squared, is

p.431 2.
(Original) b^{^}₂ = regression estimate of b₁
(Correct) b^{^}₂ = regression estimate of b₂


VOLUME 2 - Financial Reporting and Analysis, and Corporate Finance

p.90 EXAMPLE 10
last paragraph
(Original) result in the same return on assets.
(Correct) result in the same debt-to-asset ratio.

p.254
7.
(Original) Under IFRS, Passaic's balance sheet reflects the present value of the defined benefit obligation at the balance sheet date, plus any unrecognised actuarial gains (less any actuarial losses not recognised), minus any past service cost not yet recognised, minus the fair value at the balance sheet date of plan assets.
(Correct) Under IFRS, Passaic's balance sheet reflects the fair value at the balance sheet date of plan assets, minus any unrecognised actuarial gains (plus any actuarial losses not recognised), plus any past service cost not yet recognised, minus the present value of the defined benefit obligation at the balance sheet date.

p.256 31.
(Original) In this case the held for trading securities
(Correct) In this case the held-to-maturity securities

p.257 36.
(Original) (7.5% industry vs. 7.2% SeaBriar for 2006)
(Correct) (7.5% industry vs. 7.2% SeaBriar for 2008)

p.415
(Original) Companies with low (high) earnings quality tend to experience lower (higher) accounting rates of return and relatively lower excess stock returns in future periods.
(Correct) Companies with low (high) earnings quality tend to experience lower (higher) accounting rates of return and relatively lower(higher) excess stock returns in future periods.



VOLUME 3 - Equity Investments

VOLUME 4 - Alternative Asset Valuation and Fixed Income

VOLUME 5 - Derivatives and Portfolio Management

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[2] Schweser (2011 CFA Level II)

• Practice Exams Volume 1
• Exam 1
• Morning Session
• p.93 57.
• (Original) the COGS for 201X would be ($ millions):
• (Correct) the COGS for 20X1 would be ($ millions):
• Exam 3
• Afternoon Session
• p.261
• (Original) G = growth rate = g/(r-g)
• (Correct) G = growth factor = g/(r-g)
• p.263
• (Original) Both methods (Note: equity and acquisition method) result in the same net income, so Statement 1 is incorrect.
• (Correct) Net income under equity method (+45% net income of acquired company) is lower than the one under acquisition method (+100% net income of  acquired company), so Statement 1 is incorrect.
• Practice Exams Volume 2
• Exam 1
• Morning Session
• p.26
• (Original) He will leave 2008 EPS and ROI out of his estimates.
• (Correct) He will leave 2008 EPS and ROE out of his estimates.
• p.198 1.
• (Original) Since Gingeria is remotely located,
• (Correct) Since Binaria is remotely located,
• Afternoon Session
• p.60
• (Original) missing
• (Correct) The following description should be added to Exhibit 2: The present value of YD's future operating lease is $57 million with interest expense of $4 million.
• p.62
• (Original) He has assembled the following annual data on four of the oil and gas stocks in the portfolio.
• (Correct) He has assembled the following annual data on three of the oil and gas stocks in the portfolio.
• p.221 90.
• (Original) IFRS accounting standards allow the parent to translate an inflation-adjusted value of the nonmonetary assets and liabilities of the foreign subsidiary at the current inflation rate,
• (Correct) IFRS accounting standards allow the parent to translate an inflation-adjusted value of the nonmonetary assets and liabilities of the foreign subsidiary at the current exchange rate,
• p.223
• (Original) Note: Capitalizing R&D expense will increase YD's book value. However, the market value used in calculating YD's WACC is not impacted.
• (Correct) should be deleted
• Exam 2
• Morning Session
• p.239 53.
• (Original) Answer: A
• (Correct) Answer: C
• Afternoon Session
• p.116 84.
• (Original) Which of the following statements is least likely regarding this sale?
• (Correct) Which of the following statements is least likely accurate regarding this sale?
• p.123
• (Original) After a through analysis of Targus's future prospects, Alpha Fund's management believes that there is a possible 15% risk of failure for the company.
• (Correct) should be deleted
• Exam 3
• Morning Session
• p.138
• (Original) Luna then reviews TIM's projected commission dollars for the year and decides there are more than enough soft dollars to pat the StockCal, AGF, and Add-Invest Software bills combined.
• (Correct) Luna then reviews TIM's projected commission dollars for the year and decides there are more than enough soft dollars to pat the StockCal, AGF, and Add-Invest Software bills combined.
• p.139 2, 3
• (Original) Gobble Insurance
• (Correct) Broadway Life Insurance
• Afternoon Session
• p.176
• (Original) 74. Fox estimates that the fair value of Target's other assets are $250 million.
• (Correct) 74. Fox estimates that the fair value of Target's PP&E are $250 million.
• p.275 76.
• (Original) The increase/decrease to Hope's investment balance is equal to the investment balance at the beginning of year plus equity income less dividend paid.
• (Correct) The increase/decrease to Hope's investment balance is equal to the investment balance at the beginning of year plus equity income less dividend paid.

• Practice Exams Volume 1 (2010 CFA Level II)
• Exam 3
• Afternoon Session
• p.264 89.
• (Original) Confidence risk represents the unexpected change in the difference between the return of risky corporate bonds and corporate bonds.
• (Correct) Confidence risk represents the unexpected change in the difference between the return of risky corporate bonds and government bonds.
• Practice Exams Volume 2 (2010 CFA Level II)
• Exam 1
• Afternoon Session
• p.222 107.
• (Original) ROE = $195 million / $795 million = 0.245
• (Correct) ROE = $19.5 million / $79.5 million = 0.245

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[3] CFA Institute 2011 Level II Mock Exam

• Morning Session
• Suburban Publishers Case Scenario
• Exhibit 3
• (Original) Shareholders' Equity (in $-millions) for ...
• (Correct) Shareholders' Equity (in $-thousands) for ...