Level II of the CFA exam introduces vignettes*. A vignette describes a business scenario in several paragraphs using a mix of text, tables, financial statements, and so on. As part of preparing for Level II, you must develop the ability to quickly scan through a #vignette and pick out the pieces of data needed to answer a particular question. Let’s look at a sample vignette and its questions. *Vignette - пример 1. Holly Jameson has recently started a new role as a bond analyst at Holt Investment Management, LLC, based in Farland. Her team leader has provided her with up-to-date but incomplete data on the term structure of interest rates, summarized in Exhibit 1. Exhibit 1: Farland Treasury Bond* Rates *Treasury Bonds – долгосрочные казначейские облигации. Holly has been asked to assess whether a specific treasury bond that Holt is considering recommending to its clients is fairly priced. The bond pays a 6% annual coupon, matures in three years’ time, and is trading at $108.30. In a discussion in the staff dining room shortly after she joined the firm, Holly’s colleague, Doug Ross, made a confident assertion, “I really don’t know how some people find bond trading difficult. For each specific maturity, spot rates are always lower than forward rates, and forward rates are always lower than YTM*. So, you can always achieve a higher return by riding the yield curve. I’ve been doing that since my first day on the job.” Holt offers both domestic and international bonds to its clients to enable them to benefit from risk reduction through diversification. Holly has carried out some preliminary research on the Farland bond market and has found that the yield curve has an unexpected shape and does not seem to be driven by interest rate expectations. She asks her team leader for advice, who tells her, “Things are strange in Farland. Rates are influenced simply by the supply and demand of bonds of specific maturities. Different types of investors want particular maturity bonds, and they never seem to deviate** from their preferences. High demand for 5-year bonds has pushed prices up and yields down.” *YTM- Доходность к погашению ** deviate [ˈdi:vɪeɪt] v. отклоняться; отступать; уклоняться to be continued…