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Study Session 2: Quantitative Methods: Basic Concepts

Question-Time value of Money

Hi,

Can anyone please help to explain this question? I am having a trouble with these kinds of problems.

Total Probability Rule/Bayes Formula

Just wondering if I am the only one that is really struggling with questions relating to the Total Probability rule? I’m solid with everything else in Quants and the Probability Concepts reading but for whatever reason, questions relating to this I just can’t grasp. Any recommendations or am I the only one that this is not clicking for?

Thanks.

MAD and Variance Formulas

Is the MAD and Variance formulas the same, except that in variance you elevate to square?

Notes in studies

In general do you guys usually take notes when studying?

Or just read and answer questions?

In the beginning when I started studying I was taking notes, but figured out would probably get massive and I would probably not even review the notes I was taking so I stopped doing it, I`m sticking with reading and answering the questions, and I usually take notes of the resolution of the question…

Is this a good order to study each section?

Quant. Methods
FI
Review
Der/Alt
FRA
Review
Equity
PM
Review
Corp Finance
Economics
Ethics

I started with QM and have been spending alot of time with TVM questions which I finished, I recently started statistics (which such a loooong topic), Should I go with this order after Im done with quant?

What are the hardest topics in your opinion?

CF Sum Problem

Q:
A saver deposits the following amounts in an account paying a stated annual rate of 4%, compounded semiannually:

Year
End of Year Deposits ($)

1
4,000

2
8,000

3
7,000

4
10,000

Q. At the end of Year 4, the value of the account is closest to:

  1. $30,432
  2. $30,447
  3. $31,677

I enter CFo = 0 , C01 = 4,000 F01 = 1 ….. C04 = 10,000 F04 = 1 
I = 4/2 = 2
I am getting 27,445.63

Bayes’ formula

Having a lot of trouble with Bayes’ formula. Any tips how to understand / approach this concept?

Q) You have developed a set of criteria for evaluating distressed credits. Companies that do not receive a passing score are classed as likely to go bankrupt within 12 months. You gathered the following information when validating the criteria:

Quants EOC Question - Money weighted

Hello all

Reviewing Quants Part 1 and got stuck at one EOC question, just cannot seem to get the logic. Its about money weighted return formula. Using calculator to solve for IRR. Question 10 Page 382 pls help!!! 

Checked the answer at the back and still dont get it. Thank you all. 

Any Study Plan Suggestion?

Basicly I started to study for the CFA Exam this month and I will do the test in June 2020, I`m getting a little scared because I only done 60 pages since I started, there was alot of things that I had to go really slowly to get and had to do alot of questions too see If really got the content.

Does anyone have a suggestion for me?

I`m studying fully with CFA Official Material at the moment, but I`m considering switch to Mark Meldrum material (as I`m taking so much time with the officual books)

Variance

Cov = E[Ri - E(Ri)(Rj-E(Rj)]

Variance (B) = E[(Rb-E(Rb)]2 

The 2nd formula was used to find the standard deviation for stock B in a question. I am confused. So another formula for variance if SD is not already given is derived from Cov? -> Variance (B) = E[(Rb-E(Rb)]2

Can anyone comment and explain the link here?

Thank you