Just took the exam yesterday. There is a strong focus on understanding the concepts. If you have mastered the concepts well, the time is more than enough. A few key areas:

1) Accounting

a) Impact of different accounting treatment on financial ratios and cash flows. e.g. operating lease vs. capital lease for both lessee and lessor, capitalize costs vs. expensing costs.

b) Effect of statutory tax rate change on deferred tax assets and deferred tax liabilities and consequent impact on equity.

c) Calculate CFO given changes in balance sheet and income statement items.

d) Effect on EPS if repurchase share by issuing debt. determine whether a security is anti-dilutive or dilutive. 

2) bond valuation, formula for computing duration is tested. Although convexity adjustment formula is not tested, the concept of convexity appears in several questions. one of the questions tells you that convexity adjustment for a bond is +1.2%, duration is 10, what is the change of bond price given a 100bps change in rate. another question asks about the convexity of callable bond at different yield level relative to coupon rate. Implied forward rate calculation is tested in one of the questions. Concept of option cost appears in more than one question. e.g. you are asked to select which bond has the highest yield spread, choices are: noncallable bond, callable bond with 1-year deferred call, callable bond with 2-year deferred call, callable bond with 3-year deferred call.

3) capital budgeting, including categories of capital budgeting, pros and consn of NPV vs. IRR for capital budgeting application. One of the questions was: if a project has IRR of 10%, and the NPV for the project is -$250,000 using required rate of return of 11%, what is the change in NPV if required rate of return is now 12%? the choices are decrease more than 250,000, decrease less than 250,000, increase more than 250,000, increase less than 250,000

4) there are a few questions testing concepts and advantages/disadvantages of alternative investments such as hedge funds, open-end funds, close-end funds, fund of funds, etc. Income approach to valuate real estate investment was also tested. A question asked about the margin account balance for futures contract given price changes, the trick here is that in day 1, margin account balance falls below maintenance margin and need to top up the balance, in day 2, there is a favorable price movement and margin account balance is further increased, if you ignore the day 1 top up amount, you will fall into the trap. Another question tested the concept of future margin account, note that future margin account is different from share margin account in that it is not for the purpose of borrowing money, rather it is used to mark to market on a daily basis.

I feel that the Schweser sample exam questions are helpful in getting you up to speed a few days before the exam. But the actual exam this time has a stronger focus on conceptual questions compared to Schweser. Eventually, understanding the concepts are more important as you may soon forget about the formulas, but if you internalize the concepts, you will benefit from the study both personally and professionally.

Lease， tax liability

i bet it's 1-year deferred call bond.

Z-spread = OAS + option cost, given all four bond have same OAS, 1-year deferred callable bond has biggest call option cost, therefore has the biggest Z-spread.

these four bonds are identical except for the call provision, therefore there OAS should be same.

I agree with u regarding the greatest protection for issuers in 1-year deferred call bond.

But I re-considered and chose 3-year deferred call.

Depict from the callable bond curve, call option cost=option-fee bond price - call price.  As the interest rate falls towards zero, the option cost increased a lot. So I guess the longer the deferred call peirod combined with the lower interest rate, the difference between call price and option-free price increased.

That means we investors have to accept the call price set by issues much lower than the market price after 3 years.

It's just my analysis. Welcome for any comment.

according to your argument, then 4-year deferred call bond will have bigger spread, and then n-year deferred call bond will have bigger spread if n is bigger. However, non-callable bond could be look as a bond with infinite year deferred call bond, thus has biggest spread. In fact, non-callable should have smallest spread.

so, I could not agree with your argument.

I'm happy that everyone here can share opinion.

Whether I'm right or wrong, I still feel fulfilled as I can learn a lot from u guy discussing here.Great minds meet here, right?

Anyway, hope us can pass.