ERRATA FOR CFA LEVEL III MATERIAL − March 2004
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
The first sentence of the example should state
Before the 1960s, dividend yields usually exceeded bond yields
Study Book 3 – Derivatives & Risk Analysis
The formula box should read
In other words, the numerator should read CovarianceR£,s, not CovarianceR$,s.
The graph of the Protective Put should show –30 on the y-axis, not –20.
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.
The third line of the example should state that the issue price is 100.1 not 101.
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
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
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
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
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.