This past Saturday I sat for the second of three tests for the Chartered Financial Analyst (CFA) designation. There is about 2,500 pages of material and 120 questions. 400+ hours of studying, six hours of testing and 120 questions. There are 20 page to page and a half vignettes that describe the scenario and the questions are based on the vignette.
As you may guess, you can’t possible cover all the material in 120 questions. To cover as much ground as possible, the test consists of heavily nested questions. The vignette will contain things like a total asset turnover ratio, a profit margin, the amount of debt and assets a company has, the tax rate, the amount of depreciation taken, the dividend level and earnings before interest, taxes and deprecation and the amount of interest paid and the required return on equity. If the question asks for the franchise value of the firm, you need to take all that and calculate, growth rates, required rates of return, and all that allows you to figure out the franchise factor. The worst part is that of the three multiple choice questions, at least one, if not both, will be the answer you get if you make a common calculation error. Oi.
Last year, 39% of the candidates passed the exam. I’ll know if I passed at the end of July.
My original plan was to reward myself for passing all three exams by buying a new road bike and training for a 100-mile ride around Lake Tahoe. But that is, at the very least, 15 months away. When I was in high school and early college, I was always on my bike. It was a Raleigh Olympian that I bought from the Erickson’s, who lived down the street. I started combing Craig’s List for a new bike. After not being able to find one, I posted a wanted ad. My mistake was posting how much I had to spend. Folks contacted me letting know that they had just the bike I wanted for just the amount I had to spend. Someone wanted to sell me a beat up bike for $400. I said no.
Then, just as things seem darkest, I got a text from a guy who was selling a Specialized Allez (it is a slightly older model than in the link) road bike, my size, for $275. He had moved on to mountain biking and wanted to give his old road bike a good home. And he did. Honestly, for that price, I thought it might be stolen. But after talking with the guy for a while, he had the history of the bike, his likes and dislikes, etc. This was the kind of stuff you know about you favorite car. I was satisfied.
To celebrate the bike and test, I signed up for a 62 mile ride along the coast of California. You can find the ride here.
I am still getting up at an obscenely early hour, just to stay in the habit. Instead of studying derivatives, I hope to catch up on all the great blogging opportunities that have passed me by.
And so it goes.