[jeff]

I’ve had a few requests for April/May Study Groups…March will be here before you know it.

In order to take an early April exam, you should begin studying…now. 🙂

AUD - 79
BEC - 80
FAR - 76
REG - 92

Jeff Elliott, CPA (KS)
NINJA CPA | NINJA CMA | NINJA CPE | Another71

[Determined CPA]

This is a ninja question. It was after midnight when I did the question so I assumed I was exhausted but I think ninja is wrong. Ugh

A - 75
B - 78 God is good.
F - 77 Answered prayers.
R - 84! Done!!

Paperwork sent - waiting for license!!
Still on a cloud and in shock. Through God, all things will happen.

[Determined CPA]

If the central bank of a country raises interest rates sharply, the country's currency will most likely:

answer: increase in relative value.

I thought as the interest rates increase, the value of the currency decreases? The explanation below is saying that the demand for the currency decreases, not the value of the currency. Does this seem correct?

explanation: If the central bank of a country raises interest rates sharply, the country's currency will most likely increase in relative value. This is because as interest rates increase, the currency offers a higher return through the interests. The currency will become more desirable as an investment because the return is relatively higher. The currency “costs” more, so its value increases. (The demand for currency correspondingly decreases.)

A - 75
B - 78 God is good.
F - 77 Answered prayers.
R - 84! Done!!

Paperwork sent - waiting for license!!
Still on a cloud and in shock. Through God, all things will happen.

[scarletknight91]

Determined CPA, think of it this way. if you had the option to invest in something of equal risk for 12% or .02%, which investment would you take all else equal? so, the argument is, if the 12% return is in pesos, american are going to want to get a 12% return for their savings accounts (for example) rather than .02% in a savings account here in the us. hence, ppl will demand more peso, and then that means higher valuation, higher valuation means their goods are more expensive and then their exports fall. thats why raising interests rate are so effective in cooling off economies. people aren't going to want to invest in things that are costing insane amounts to finance, and their going to want to save their money because the cost of not saving is so high. plus, goods in a country with high valuation will have more expensive goods, driving down their exports to imports ratio.

FAR: PASSED
REG: PASSED
AUD: PASSED
BEC: PASSED

DONE

[scarletknight91]

btw the other question you posted was wrong i believe, not even going to attempt to rationalize it haha

FAR: PASSED
REG: PASSED
AUD: PASSED
BEC: PASSED

DONE

[scarletknight91]

and the last sentence it says where it has a corresponding decrease is a long term effect of a higher currency valuation over time, less people will pay for the higher premium so demand falls. not sure what else it could be meaning by that. i wouldnt worry about it, just know that higher interest rates increase demand for a currency and lower rates reduce demand for a currency. also as inflation increases, less people will want that currency as they try to protect their purchasing power through another (stable) currency

FAR: PASSED
REG: PASSED
AUD: PASSED
BEC: PASSED

DONE

[Jsingh23]

Gametime! I will let you guys know how it goes!

AUDIT-89
BEC-83
REG-78
FAR- April 19

[taxman89]

if US dollars will give my 8% and CAD dollars will give me 3% i am investing in US dollars.

I have the same thought as you but i think the question assumes all things equal. Usually if the rate would increase there are other factors causing the increase (which is why its is assumed bad?)

so yeah, i had the same thought but i think its different because you are assuming there is nothing causing the increase other than the central bank's whim

AUD - 75
BEC - 77
FAR - 78
REG - 82

AUD: 61-67-75 (Thanks ninja aud)
BEC: 77
FAR: 78
REG:69-73-70-82

Aud-75 3x I knew i never liked you
Bec-77 1x being in the bubble is stressful
Reg-82 4x its not me its you...and no we cant be friends
Far-78 1x easiest section

[Determined CPA]

thank you scarletknight91 – your explanation makes sense and actually clears up a lot of my general understanding of the total impact on the rates. thank you! you know your stuff – you're going to ace this exam! have you been getting 90s on them all?

A - 75
B - 78 God is good.
F - 77 Answered prayers.
R - 84! Done!!

Paperwork sent - waiting for license!!
Still on a cloud and in shock. Through God, all things will happen.

[Determined CPA]

thanks taxman89. I feel like I get some questions where the answer is ‘the US currency is depreciating' and some questions where the answer is ‘increase in value'. I guess the key is ‘everything else remains the same'. Ugh. Economics is not my strong point and this exam is going to suck for me.

A - 75
B - 78 God is good.
F - 77 Answered prayers.
R - 84! Done!!

Paperwork sent - waiting for license!!
Still on a cloud and in shock. Through God, all things will happen.

[MrsBing]

I'm somewhat confident on chapters 1 – 3 and 5 (except standard overhead; this is killing me. I keep getting confused on everything that goes into standard overhead: std hours allowed, std rate, etc).

Chapter 4 (IT) just sucks. Chapter 6, I'm reviewing again since I didn't spend much time on this.

2 more days to go. I am so tired of studying. I think I feel the least confident on BEC than the other exams.

Edit by Jeff: This thread is hung up…new one started: https://www.another71.com/cpa-exam-forum/topic/q2-bec-study-group-2014-thread-2

Becker, Wiley Test Bank, and Ninja 10 Point Combo!

FAR: 89
REG: 87
AUD: 92
BEC: 75
Ethics: 90

Licensed Arizona CPA

[Author]

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