How to become credit analyst

A credit rating estimates the credit worthiness of an individual, corporation, or even a country. It is an evaluation made by credit bureaus of a borrower’s overall credit history. A credit rating is also known as an evaluation of a potential borrower’s ability to repay debt, prepared by a credit analyst at the request of lender. Credit ratings are calculated from financial history and current assets. liabilities & cashflows. Typically, a credit rating tells a lender or investor the probability of the subject being able to pay back a loan.

Opportunities are emerging in India for professionals in this field. Companies like CRISIL & ICRA are the leading organization in the country for Credit rating. As more and more companies are raising debt from the market for their expansion, requirement of credit analyst is increasing.
To become Credit Analyst sound fundamentals of Accountancy, Financial Markets and Financial Modeling is required.
If you are a graduate and want to become a Credit Analyst you can go for the 2 years program from CRISIL , for more information you can visit to CRISIL website.

Chartered Accountants, CFA, MBA in Finance with sound knowledge on Financial Modeling can also find great opportunities in this area. To learn financial modeling one can go for NSE India Certified Financial Modeling program.

Skills set require to become a credit Analyst:
1. Sound Knowledge on Accountancy, Financial Markets, Financial Management
2. Critical thinking
3. Number crunching ability
4. Excel Modeling

write to me at ronojoymishra@gmail.com in case you require any other information.

Keep your feedback coming.

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Calculators allowed in CFA exams

CFA Calculators
I have observed some confusion among the CFA candidates. This is about calculators allowed in CFA exams. So my this post is all about calculators allowed in CFA exams.

During CFA exams, only two models of calculators are allowed to use.

– Texas Instruments BA II Plus (including BA II Plus Professional)
– Hewlett Packard 12C(including the HP 12C Platinum)

The idea behind this strict guidline from CFA Institure about calculator is to keep the fairness and integrity of the exam. Because some calculators have text-storing capabilities.

Some candidates who wish to use Postfix notation entry can use the HP model and other who prefers to use algebraic notaion entry can use the Texas Instrument model.

The calculator will be inspected before starting of the exam. Use or possesion of any other type of calculator can result in termination of the candidate from the exam.

Calculator covers, keystroke cards and additional batteries are allowed in the exam. You also can carry the small screwdriver with you in case you require to chage the batteries of your BA Plus calculator. However the instruction manuals is not allowed in the exmas.

Write to me at ronojoymishra@gmail.com in case you require any other info/suggestion.

To know about the CFA, read my earlier blogs:

CFA level 1 – What is the minimum passing score (MPS)
What is the pass percentage for CFA exams
Required work experience to become a CFA charterholder
Different levels of CFA
Requirements to become CFA
How to prepare CFA level -1
Difference between CFA and CFP

Keep your feedback coming 🙂

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CFA level 1 – What is the minimum passing score (MPS)

As per CFA institute, in June 2010 exam, Forty-two percent of 46,863 CFA level 1 candidates passed.

The big question is what is the minimum passing score (MPS) for CFA level 1? Well, the fact is that CFAI never releases the minimum passing scores. The MPS is calculated by the CFA Institute Board of Governors each year after the exams finish.

In early 70s and 80s it was considered that minimum passing score (MPS) was 70% of the average of the ‘several best papers’ (Here the ‘several best papers’ means the result of the top one percent candidates).

However, now-a-days according to the CFA Institute they have started using the Angloff Method as a touchstone to set the Minimum Passing Score for the CFA Level 1 Exams.

As per wikipedia:

“The Angoff approach is very widely used. This method requires the assembly of a group of subject matter experts, who are asked to evaluate each item and estimate the proportion of minimally competent examinees that would correctly answer the item. The ratings are averaged across raters for each item and then summed to obtain a panel-recommended raw cutscore. This cutscore then represents the score which the panel estimates a minimally competent candidate would get.”

So it is clear that candidates cannot know the MPS or even the individual scores. However CFA institute gives a score matrix report to all the students as to how much they scored in the each of the sections.

As per this score matrix, the “70%” is considered average to above average.

I personally believe that more than 70% marks can ensure that you clear the CFA level 1. So aim for it and achieve it. All the best!!!!

For suggestions/queries you can write to me at ronojoymishra@gmail.com

For more info on CFA you can go through the rest of my posts.

What is the pass percentage for CFA exams
Required work experience to become a CFA charterholder
Requirements to become CFA
Different levels of CFA

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What is the pass percentage for CFA exams

This question comes across the mind of many people who appear for the CFA exam. Well, to address this question let us look at the pass percentage of 2010 exams of all 3 levels. In 2010, the pass percentage for CFA Level I were 42%; for CFA Level II they were 39% and for CFA Level III they were 46%.

What we can infer from the above is that level II is the hardest whereas level III is the easiest to pass. However, the CFA Institute doesn’t agree to the above statement. They in fact say that pass rate for CFA Level III is generally higher because candidates are, “more prepared and focused on achieving the CFA charterholder.

If we look at the pass percentage for all levels of CFA exams from 1963 to 2010 (Read PDF), then we can conclude that the pass percentage has increased over the years. Studies show that relatively more people clear CFA level II than CFA level I. And more people clear CFA level III than CFA level II.

This may be true because by the time a candidate appears for the CFA Level II and CFA Level III exams, he/she would be more dedicated to clear the exams.

The level of preparedness with the Level II and Level III is also high. I know of candidates who interact with fellow students, from not only different cities, but different nations too. There are groups on Facebook which are dedicated to helping the student community.

I would suggest don’t think about the pass percentage, it is all in the attitude. Just keep your good work going on. You will definitely crack the all levels of CFA.

Write to me at ronojoymishra@gmail.com in case you require any other info/suggestion.

To know about the CFA, read my earlier blogs:

Required work experience to become a CFA charterholder
Requirements to become CFA
How to prepare CFA level -1
Different levels of CFA

Keep your feedback coming 🙂

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Required work experience to become a CFA charterholder

In order to earn a CFA charterholder one needs to complete the 4 years of qualified, professional work experience in addition to passing the 3 levels of CFA exam. However you can apply for the different levels of CFA and clear them without completing the 4 years of work experience. But you will get the CFA charterholder once you complete the two above mentioned criteria.

Now the question comes, what is the qualified work experience? Well as per the quidlines provided by the CFA institute acceptable work experience includes activities that consist to a significant extent of collecting, evaluating, or applying financial, economic, or statistical data (as appropriate) as part of the investment decision-making process; or supervising, directly or indirectly, persons who practice such activities; or the teaching of such activities. The investment decision-making process is the professional practice of financial analysis, investment management, securities analysis, or other similar activities.

In work experience internships don’t count. Nor does investing your own money.

I have seen many people who straight after their graduation pursue CFA along with regular job. So they can accrue the required work experience while clearing the different levels of CFA.

Kindly write me at ronojoymishra@gmail.com in case you require any other info/suggestion.

To know about the CFA, read my earlier blogs:

Requirements to become CFA
How to prepare CFA level -1
Different levels of CFA

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Different levels of CFA

Becoming a CFA (Chartered Financial Analyst), could be the great achievement for people who are in the field of finance and investment. One needs to cover all the three levels of CFA to become the charter holder.

As far as the difficulty level is concerned each level becomes difficult gradually. Less than half of people who take CFA level 1 are able to pass it. Less than half of those who pass level 1 are able to advance to CFA level 2. Two thirds of those who clear the CFA level 2 are able to become the CFA charter holder.

CFA Level 1 – The level 1 of CFA focuses on introduction to asses valuation, financial reporting and analysis and portfolio management techniques.
It consist of 240 multiple choice questions. The test is divided into two three hour sessions, with a two hour lunch break in between. For the test, only two calculators are allowed one is Hewlett Packard 12C and another is Texas Instruments BA II Plus. There is no set minimum passing score. As
a result of your exam you only will get to know grades of pass or fail.

CFA Level 2 – This is the second hurdle to cross to become CFA. The level 2 focuses on asset valuation, and includes applications of the tools and inputs (including economics, financial reporting and analysis, and quantitative methods) in asset valuation.
Unlike Level 1, the level 2 exam is conducted once in a year that is in June. Like Level 1 this one also divided into 2 three hours session, with a two hour lunch break in between. The format of multiple questions are little different in level 2. They will come in an item set format. It means you will be given a case study to read, between 1-3 pages and then you will be asked to answer several question based on that reading. There would be total of 20 item sets and each item set will have 6 multiple choice questions.

Like Level 1 only two calculators are allowed one is Hewlett Packard 12C and another is Texas Instruments BA II Plus.

CFA Level 3 – The final stepping stone to become a CFA charter holder. This level focuses on portfolio management, and includes strategies for applying the tools, inputs, and asset valuation models in managing equity, fixed income, and derivative investments for individuals and institutions.

Like CFA level 2 this exam also held once in a year and has 2 three hours session, with a two hour lunch break in between. In first session there are 12-15 questions of essay types and with some sub questions. In the next session there would be 10 case studies of 1-3 pages and you need to answer 6 multiple questions based on each case study.

I hope you will clear all the three levels of CFA with your hard work and dedication.

Kindly write me in case you require any other info/suggestion.

To know about the CFA, read my earlier blogs
Requirements to become CFA
How to prepare CFA level -1

Keep your feedback coming 🙂

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Creating wealth

The average Indian is earning money. But is he creating wealth?

India is going through its best phase ever and Indians are savouring opportunities and reaping benefits unlike ever before. Every sector is registering steady growth and the average India wallet is bulging in size steadily. With all that income coming in, the question to ask is, are Indians planning the future of their monies well enough? Yes, they are investing in term deposits, stocks, mutual funds, insurance etc. but a very miniscule percentage of Indians would be going about their investments with a strategy. But then, is it necessary to have a strategy? Is it important to have a financial plan for life?

One reason for an affirmative answer is inflation. Rising costs will make incomes look smaller and as the years roll by. Another reason is risk. Untoward developments in life will catch an individual unawares unless he`s planned for contingencies. Yet another reason is aspiration. Desires and dreams are an important part of day to day living and their fulfillment is what life enjoyable.

Covering all these aspects of life will call for much more then simplistic investment in a few financial products. It calls for a well thought out financial strategy. A strategy that will take into consideration the past, present and the future. Individuals are increasingly getting aware of the criticality of financial planning but don`t have the expertise to develop such a plan and make the needed financial decision.

I will try to share tips and knowledge here as to how to create and manage wealth.

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