Hi All, Since there is a ton of stuff to remember, and last year there was a thread on neumonics that helped me remember so much stuff. I haven’t seen any for Level 3 yet, so was thinking now is about the time to start one going… feel free to contibute. Specifications for a Valid Benchmark Owned Measurable Appropriate Investable Reflective of Current Investment Opinions Unambiguous Specified in Advance OMAIR US (My name is Omair, so thus, OMAIR US) - Some people use SAMURAI for this
Another one… factors that affect Corridor Widths Risk Tolerance Correlation Transaction Costs Volatility (there are 2 volatilities) So RCTV - just remember that only volatility is inversely related to the width - i.e volatility up, then corridor is narrower.
^ can you please write when is wider and when is narrow corridor with each?
all are inversely related except correlation
All you have to know for this is volatility is negatively correlated with corrider widths. everything else is positively correlated. Volatility goes up, corridors get narrower. (this works with both volatilities) Anything else goes up, corridors get wider.
Had to look it up after seeing Aimees post and knowing that she is typically right. CFAI V6 page 93. Factors positively related with corridor width: -transaction costs -risk tolerance -correlation with rest of portfolio Factors negatively related with corridor width: -asset class volatility -volatility of rest of portfolio
Thanks guys for a nice shortcut
Someone gave this one earlier for forecasting traps: OCRAPS Overconfidence Confirming evidence Recallability Anchoring Prudence Status quo
OCRAPS hahahahah
Wow, I was way off on that one!! Thanks for the correction, after re-reading it I have no idea why my notes say that…
That’s a good one… I hope I don’t say that on exam day!!! 
Trust me, you’ll never forget it now 
Ocraps traps, lol
OCRAPS is funny. Although I used ASEPRO (E for Evidence trap rather than C for Confirming Evidence trap).
I use this for psych traps : Overconfident Chief Executives Start Quietly Piling Risk - Overconfidence, Confirming Expectations, Status Quo, Prudence, Recallability CME Forming Process : Forming Expectations Needed, Historically Provided Capital Managers Many Incentives & Gratifying Invitations Into Overlooking Market Expectations Made Rashly - Find Expectations Needed, Historical Performance, Choose Methods/Models/Info, Get Info, Interpret Output, Make Expectations, Monitor & Refine Behavioral Heuristics : Check Anchor/OAR Availability– Conservatism, Anchoring, Overconfidence, Ambiguity aversion, Representativeness, Availability IPS Constraints : UR LIT - Unique, Regulatory/legal, Liquidity, tIme, Tax
IPS: RR objectives + TTLLU constraints MBS securities exposed to “SPC”: Sector risk Prepayment risk Convexity risk Non-MBS securities exposed to: “ISCOY”: Interest rate risk Spread risk Credit risk Optionality risk Yield curve risk
Reasons for NOT trading: Please Stop Bothering Susan Portfolio constraints Seasonality Buy and hold Story disagreements
Premiums added to the risk-free rat eto get the bond yield: MILD tax Maturity premium Iinflation premium Liquidity premium Default premim and… tax premium
Good benchmark should exhibit: Minor systematic bias betw account and benchmark return Minimal tracking error Low turnover Strong correlation betw the manager’s universe of securities and the benchmark
Macro attribution analysis: A net contribution Risk free asset Asset categories Benchmark Investment managers Allocation effect
tiddly, thought that was a MILF tax … for corridor, I just memorize CO RI TR (sounds kind of like ‘corridor’ if you say it) as positively related to corridors. CO = correlation, RI = risk tolerance, TR = transactions, so as any go up, so do corridor widths. Then vol is not part of the CO RI TR so is inversely related to optimal corridor widths…