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Level I

Market Cap to GDP

Hi,

Why is market cap to GDP at 100% considered overvalued? I know the long term average is substantially below this, but just purely logically, if the market cap is equal to GDP, shouldn’t that mean fair value? Below 100 is undervalued, above 100 overvalued?

I guess:

Market cap of shares doesn’t take into account debt, so market cap should always be below GDP?

Conversion parity

Hi all,

I don’t suppose someone could help me out with conversion parity as I am reading two contradicting things from two different books. 

Let’s say a stock was priced at $30. If it is trading above $30, does this mean that it is above parity or below parity?

Any help would be appreciated!

Computer based exam format

From the CFAI:

” We are excited to announce that CFA Institute will transition Level I of the CFA® Program to computer-based testing in 2021. This capability enables CFA Institute to keep pace with the evolution of global testing and credentialing practices and will enhance the overall candidate experience. We expect to offer a wider selection of test venues, more flexible scheduling, and expedited exam results delivery. The exam will be offered in proctored test centers around the world. 

Futures prices and interest rates

Hey all

If there is a direct relationship with futures prices and interest rates, futures are priced higher than forwards. Isn’t the price of a futures contract set at the beginning of the contract? 

Also, I’ve seen explanations of this based on what happens when the underlying moves. So, can someone explain this in terms of the futures price moving (not the underlying). If the reasoning is that as the underlying moves up a long futures contract (at expiration) will be more valuable, it still doesn’t make sense with respect to price

Securitized Debt and Hedge Funds

I don’t see the logic why securitized debt isn’t classed as a traditional investment?

Also, what happens to hedge funds that invest in equities or fixed income only? Are these classed as traditional also?

100 day prep strategy?

Assuming nothing has been touched till date, what should be an ideal allocation to reading & questions?