For any calculation, do we need to write the formula before plugging in the numbers? I hope not. Any thoughts?
if it is not a multiple choice - yes, i would do that, you dont want to make stupid calc mistake and get your points off for that
it can only help with partial credit
Why wouldn’t you?
Well, it’s kind of hard to remember those formulas in exact form, for example, those different return components in global return attribution. What i intend to do is to plug in the numbers as the first step, then do the calculation second.
Sometimes I am quite amazed by the questions on this board. If you are answering the long questions (not the MC questions) and you may be given partial credit for showing your working, why would you not show your calculations? Whether you put the calculations on top or below, you have to make it understandable for the examiner so he can decipher your thought process and potentially give you some marks. PLEASE USE COMMON SENSE!!! I worry about the day when all these new CFA chaterholders are providing financial advice to people, but lack basic common sense.
In defense of elcaro, I think he’s saying that some calculations do not require rote memorization of a formula. The performance attribution section is a good example, these attribution calcs can be done using common sense, without memorizing what seems like about 100 formulas. Another example is option payoffs, which can be done with a simple understanding of the payoff diagram. Again, no need to memorize the formula. I’ll still say write the formula if you can (and if you have time) but no need to be so harsh on the guy/gal.
i will show my calculation, just not write the formula if it’s complicated since 1. i may write it in a wrong way which will cost me points 2. it takes time.y For example to calculate security selection return in 2007 sample exam, do we need to write formula security selection = sum_i [w_{i, l} * (r_{i, p, l} - r_{i, m, l})] in order to get full credit? On the hand, i will definitely write all the simple formulas, such as CAPM, IR, M^2, Sharpe Ratio etc. Also as far as i can see, there is no common sense in CFA. Only CFA sense makes sense.
TooOld4This Wrote: ------------------------------------------------------- > In defense of elcaro, I think he’s saying that > some calculations do not require rote memorization > of a formula. The performance attribution section > is a good example, these attribution calcs can be > done using common sense, without memorizing what > seems like about 100 formulas. Another example is > option payoffs, which can be done with a simple > understanding of the payoff diagram. Again, no > need to memorize the formula. > > I’ll still say write the formula if you can (and > if you have time) but no need to be so harsh on > the guy/gal. Thanks. That’s exactly what i meant. However, i do take other’s opinion that i will try to complete the steps so that i can get some credits if i calculate wrong. If i really need to calc the option payoff (i hope not), i will draw those lines, and add them together.
Oh, I see… that would be fine - if you are just going to “derive” your answer using common sense instead of using some formula, that should be fine. I do that often because I have a bad memory (but it does cost time). Just make sure you delineate your thought process clearly.