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2023 Level III Sample Exam Answers Short

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41 views

2023 Level III Sample Exam Answers Short

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geekemacser
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Financial Exam Help 123™

2023 Level III Mock Exam

Morning Session Sample Exam


Short Answers

©2023 Financial Exam Help 123™ All Rights Reserved

CFA Institute does not endorse, promote or warrant the accuracy or quality of Financial Exam Help 123™. CFA® and
Chartered Financial Analyst® are registered trademarks owned by CFA Institute.
Level III 2023 Morning Mock Exam #1 Short Answers Page 1

Question 1 relates to Derivative Securities

AJBWU Case Scenario

1.1 To achieve Degenek’s target asset allocation and target betas, determine the action (buy
or sell) and the number of small-cap equity futures contracts required.

• Buy 710 contracts

1.2 Identify one alternative derivative strategy that Degenek could use to achieve his goals
instead of his proposed futures strategy.

Synthetic futures using options

– or –

Total return equity swap

Identify the derivative security(ies) that Degenek would use, and describe his position
(e.g., long, short, buy, sell, etc.) in each derivative security.

• Short large-cap calls, long large-cap puts


• Long small-cap calls, short small-cap puts

– or (respectively) –

• Equity swap
o Pay large-cap equity total return
o Receive small-cap equity total return

©2023 Financial Exam Help 123™ All Rights Reserved

CFA Institute does not endorse, promote or warrant the accuracy or quality of Financial Exam Help 123™. CFA® and
Chartered Financial Analyst® are registered trademarks owned by CFA Institute.
Page 2 2023 Morning Mock Exam #1 Short Answers Level III

Question 3 relates to Alternative Investments

Lake Volta Capital Case Scenario

3.1 Determine whether each manager (Mumin, Samir, Franque) is appropriate for the Plan.
For each manager who is appropriate, identify the most accurate classification for that
manager’s strategy according to LVC’s list. For each manager who is inappropriate,
justify your conclusion with one reason.

Mumin

Inappropriate

• The Plan does not want to accept extraneous risks; Mumin does not hedge extraneous
risks

Samir

Appropriate

• Equity-related

Franque

Appropriate

• Specialist

Bekele

Appropriate

• Relative value

©2023 Financial Exam Help 123™ All Rights Reserved

CFA Institute does not endorse, promote or warrant the accuracy or quality of Financial Exam Help 123™. CFA® and
Chartered Financial Analyst® are registered trademarks owned by CFA Institute.
Level III 2023 Morning Mock Exam #1 Short Answers Page 3

3.2 Identify the most appropriate proxy for the Endowment’s private real assets investment
(public REITs, high-yield bonds, commodity futures). Justify your identification.

Commodity futures

• Private real assets: timber, commodities, farmland, energy, infrastructure assets


o Not real estate, bonds

©2023 Financial Exam Help 123™ All Rights Reserved

CFA Institute does not endorse, promote or warrant the accuracy or quality of Financial Exam Help 123™. CFA® and
Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

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