Hello, first post here on the forums. I have a question on how the CFAI might grade a question like the 2016 exam’s 8A.ii. This question asks how many bond contracts to buy/sell to: 1) adjust duration from 6.05 to 5.5, and 2) increase portfolio’s debt allocation from 25% to 50%.
i got the correct answer of buying 236 contracts. I first solved for the number of contracts to buy to add $37.5 million of. Ind exposure at 5.5 duration, then calculated the number of contracts to sell to lower the existing $37.5 million portfolio’s duration from 6.05 to 5.5.
I noticed the CFAI answer key solved this in reverse (number of contracts to get the additional $37.5 million allocation to s 6.05 duration, then number of contracts to lower the total $75 million portfolio duration from 6.05 to 5.5).
Would I get full marks for getting the right answer, albeit solving in a different order, or so you have to solve in the exact manner they solved to get full credit?
Lots of words, sorry. If confusing, I can post a picture of what I did for clarification.
Thanks!