CFA Level III March 2004 Errata

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CFA Level III March 2004 Errata Powered By Docstoc

The following list gives details of the errata that have been identified for the Level III
material. Please accept our apologies for any inconvenience that these points may have caused

If you have any queries concerning the errors listed below, or any other queries concerning
the Level III materials or program, please contact us on +44 20 7786 5900 or e-mail us at

Study Book 1 – Ethical and Professional Standards, Quantitative Methods & Economics

Page 316
The first sentence of the example should state

      Before the 1960s, dividend yields usually exceeded bond yields

Study Book 3 – Derivatives & Risk Analysis

Page 89
      The formula box should read

                                             CovarianceR£ ,s

      In other words, the numerator should read CovarianceR£,s, not CovarianceR$,s.

Page 137
The graph of the Protective Put should show –30 on the y-axis, not –20.

Page 147
      The bottom graph, showing a long call with a premium of 1 and a strike of 100, should
      show a strike of 110, in line with the rest of the example. The x-axis should show stock
      prices of 110 and 111, not 100 and 101.

Page 216
The third line of the example should state that the issue price is 100.1 not 101.

Page 218
The diagram on this page has the fixed rate flows and S&P flows in the wrong directions. The
directions for the arrows should be reversed, so that the investor is paying $10m x 5% and
receiving $10m x S&P.
                            ERRATA FOR CFA® LEVEL III MATERIAL – MARCH 2004

Page 280
The last paragraph should state that the benefits and problems of VAR relative to standard
deviation are considered later in this chapter (on page 283).

Question Bank for Study Books 1 & 2

Page 248
The foreign currency movement should be 0.091 or 9.1%, not 0.09 or 9%. The currency
contribution should be 0.091 (1 – 0.04) = 0.087 or 8.7%, not 0.09 (1 – 0.037) = 0.087 or

Key Concepts for Study Books 1 & 2

Page 62
The third dashed bullet point should read

Use the forecasted value of Xt+1 in the second step forecast above.

Key Concepts for Study Books 3 & 4

Page 45
The sentence at the bottom of the page should state that the final net cost is given by the swap
fixed rate x swap notional principal, not loan principle.