Contingent immunization calculation needed?

My guess is we don’t need to know the associated calculations regarding contingent immunization in LOS 27i as presented in Schweser notes as it says “Discuss” in the LOS. Anybody feel otherwise? Is CFAI going to come up with a huge item set on this one with required calculations despite that?

I just took my free CFA online exam…and got schooled. I think it was Version 6 and I think there were actually some calculations in there relating to immunization (which I got wrong of course).

I expect that one vignette will have a lot of calculations, just to prove that they can do it and to send a signal for everyone study the long series of calcs as much as possible. Most of the vignettes won’t have that, though, and you can get by with understanding the general principles. We won’t know which one whacks us, though… will it be contingent immunization? will it be two-bond hedge? will they give us a table of random numbers and ask us to do a monte-carlo by hand? My guess is if you don’t know how to do whatever they ask you that requires long calcs like that, skip it, answer the parts you can do, and come back at the end if you have time.

Pounce on simple calcs like contingent immunization.

Why am i drawing a blank when it comes to the calcs for contingent immunization??? Any hints? DAMN IT!! Nothing is sticking!

Remember cushion spread?

I think that was one where I said to myself: “I should be able to figure it out when the time comes”. Now I cant remember anything about it.

Cushion Spread is Difference between PV of Liabilities and PV of Assets, correct? I kinda remember it but this sucks…

this is that f* thing of getting the future value using required return, and discounting it using the immunization rate you can achieve, right? thx

Note to self…Review everything AGAIN! and then AGAIN! till finally something sticks. Funny thing is I’m not as worried about the IPS’s as I am about everything else, yet the IPS’s are supposed to screw everyone…I just hate the list 3 Adv/DisAdv for this and blah blah blah…

Willy, Cushion spread = Available immunization rate - required rate of return. The other calculation for contingent immunization is the dollar safety margin.

Dang it… I kinda remember it and I think if I had a problem in front of me I could work it out, but damn some sh!t isn’t sticking…

bigwilly Wrote: ------------------------------------------------------- > Note to self…Review everything AGAIN! and then > AGAIN! till finally something sticks. Funny thing > is I’m not as worried about the IPS’s as I am > about everything else, yet the IPS’s are supposed > to screw everyone…I just hate the list 3 > Adv/DisAdv for this and blah blah blah… Does IPS kill everyone every year, or was it just last year that was especially bad?

Let’s assume every year…better to scared to death and then rejoice over the “easyness” then to assume its easy and then sh!t yourself when you open teh test book.

Ok…forecast is for narrowing spreads…do you underweight/overweight treasuries and do you underweight/overweight spread sensitive sectorsi.e. MBS?..why?..yes, I know fixed is gunna rip me a new one.

cfacfacfa Wrote: ------------------------------------------------------- > Ok…forecast is for narrowing spreads…do you > underweight/overweight treasuries and do you > underweight/overweight spread sensitive > sectorsi.e. MBS?..why?..yes, I know fixed is > gunna rip me a new one. Underweight Treasuries as non-Treasuries are going to go up in price.

um yea duh…i’m an idiot…thats what happens when you stare at the book too long…all it took was trip to the bathroom…and then it clicked…thx

i refuse to go to the bathroom as i might lose some information that i might need…

^I have this stupid thing that I don’t shave a week before a major exam…f***ed up!!

CFAAtlanta Wrote: ------------------------------------------------------- > cfacfacfa Wrote: > -------------------------------------------------- > ----- > > Ok…forecast is for narrowing spreads…do > you > > underweight/overweight treasuries and do you > > underweight/overweight spread sensitive > > sectorsi.e. MBS?..why?..yes, I know fixed > is > > gunna rip me a new one. > > Underweight Treasuries as non-Treasuries are going > to go up in price. narrowing spreads indicate slowdown/recession. There is a flight to safety. Why would you underweight Treasuries in such a scenario. I think I am completely losing it…