2011 CFA Institute Mock Exam Errata 23 May 2011 To be fair to all candidates, CFA Institute does not

respond directly to individual candidate inquiries. If you have a question concerning the CFA Institute mock exams, please contact CFA Institute (info@cfainstitute.org) to have potential errata investigated. Corrections below are in bold and new corrections will be shown in red. Any necessary corrections will be posted weekly. The short scale method of numeration is used in the CFA Program curriculum. A billion is 109 and a trillion is 1012. This is in contrast to the long scale method where a billion is 1 million squared and a trillion is 1 million cubed. The short scale method of numeration is the prevalent method internationally and in the finance industry. For your convenience, the full Global Investment Performance Standards, including the GIPS Glossary, can be found at: http://www.cfapubs.org/doi/pdf/10.2469/cb.v2005.n5.4002. Level I

Level II Mock Exam Afternoon Session: Question 8 has been corrected to state: Based on Exhibit 1 and put-call parity, the price of a 6-month European call option with a strike price of $100.00 on Yorktown stock is closest to: Mock Exam Afternoon Session: The third paragraph of the Chester Midway Scenario has been corrected to state: Michael Edwards, an equity analyst at Pacific, believes that call options are an alternative approach to establishing a long position in Yorktown stock. The current market price of a six month European put option with a strike price of $100.00 is $5.35. Mock Exam Morning Session: Exhibit 2 of the Merridith Whitney Scenario has been corrected to state: Term Structure of Rates 45 Days Later (%) Days LIBOR EURIBOR HIBOR 45 2.21 2.94 1.95 135 2.62 3.03 2.45 225 3.73 3.08 2.70 315 4.92 4.15 3.85 Mock Exam Afternoon Session: Question 4 and has been corrected to state: Macharias most appropriate response to Question 1 is: Yes, by the trustees only complying with the duty: The feedback for question 4 has been corrected to state: C is correct because the trustees appear to have fulfilled the duty to be impartial to balancing income and capital as both unit trusts are balanced; invested in nearly identical underlying investments with growth opportunities and current income streams. The trustees will violate the duty to avoid fees by switching to a 2% front-end load unit trust only on the basis of

wanting to support a former employee. The Trustees will also violate the duty of delegation as it is unlikely a prudent investor would move 100% of their investments to a brand new investment manager as it could significantly increase the risk factors faced by the Fund. Mock Exam Afternoon Session: Question 49 has been corrected to state: Using year-end values in ratio calculations, according to the Gordon growth model and the inputs used by Alahtab, CRNs intrinsic value per share as of 2010 is closest to: Mock Exam Afternoon Session: Question 51 has been corrected to state: Using the data in Exhibits 1, and 2 and the tax rate suggested by Jatin, CRNs FCFE per share for 2010 is closest to: A. $0.82. B. $0.85. C. $0.92. Answer = C Free Cash Flow Valuation, Jerald Pinto, CFA, Elaine Henry, CFA, Thomas Robinson, CFA, and John Stowe, CFA 2011 Modular Level II, Vol. 4, pp. 408-409 (Example 7, Solution to 2) Study Session 12-43-d Calculate FCFF and FCFE. EBITDA (1-T) 275 (1-0.35) $ 178.75 Plus: Depreciation (T) 82.5(0.35) 28.87 Less: Net investment in fixed capital -(1,168.3 - 1,003.0) (165.30) Less: Net increase in working capital* -[(316.2-128.2) (2.87.5-97.7)] 1.80** Less: Interest (1-T) 16 (1-0.35) (10.38) Plus: Net borrowing (157.5+20) (150+15) 12.50 Free cash flow to equity (FCFE) $ FCFE per share 46.24/50 $ *Excludes cash and notes payable; **NWC2010 is less by $1.80; so a positive number. Alternatively: FCFE 2010 = NI + NCC FCInv WCInv + Net borrowing = EBT (1 tax rate) + NCC FCInv WCInv + Net borrowing (Note: Jatins T=35%) = 176.5 (1 0.35) + 82.5 165.3 (1.8) + 12.5 = 46.225 FCFE per share = 46.225/50 = $0.92 46.24 0.92

Level III Mock Exam: Question 33 has been corrected to state: Based on the data in Exhibit 2, Monts positioning of the portfolio would suggest that the spread sector that poses the most tracking error relative to the benchmark is: