At this point almost everyone on this site has put in a lot of hours, starting to feel the pressure with exam two weeks out and looking fwd to June 3rd. While the majority of material requires a solid understanding of the concepts there will be some questions on the exam and that are simply knowing a short formula or regurgitating some random fact, such as appropriate test for Heteroskedasticity or single month mortality rate. while it’s nearly impossible to recall all this tedious stuff on exam day I have come across a few acronyms that can make recall much easier.
For example, last year while preparing for the test someone mentioned the acronym HBP, hit-by-pitch (good for baseball fans) to recall the test for Heteroskedasticity is Breusch-Page. I’ve remembered it ever since and has helped answer or eliminate an option in several practice questions. While I’m quantitatively challenged I’ve tended to look for short-cuts more in this area, but for other with funny/corny acronyms please share the wealth.
A second I will add is the test to detect cointegration…CDEFG. Cointegration-Dickey Fuller/Engles Granger.
Great thread. I won’t forget that HBP acronym, already coded into my brain. Here’s one that I never forgot from level one for the 7 standards of practice. It doesn’t relate to anything in particular but the word just flows…PIDDICR (pronounce it PIDICKER). Professionalism, Integrity of Capital Markets, Duties to Employers, Duties to Clients, Investment Analysis and Recommendations, Conflicts of Interest, Responsibility as a CFA Candidate/Charterholder. Those may not be exactly correct but close enough, not looking up right now
Not really an acronym, but helps me remember for these formulas:
S MM = ABS/[1 - (SMM x (M-1)]
A BS = SMM/[1 + (SMM x (M-1)]
To remember if you add or subtract, I remember the S in SMM is for subtract and the A in ABS is for add.
@bmer4444 which one is this formula? I thought SMM was only used in the context of CPR.
I had not invented RRTTLLU[Read it as Ratlooon, in hindi it means, let me mug up :)]. It’s from Mr Andrew Holmes, Schweser. These are supposed to be objectives and constraints of IPS.
RR: Risk and Return
TT: Tax and Time Horizon
L: Liquidity and Legal
U: Unique
Formulas from reading 52 on Asset-Backed securities. ABS = Absolute Prepayment Speed…Not sure why its not APS. Pg. 430 of Fixed Income.
I think you’fe thinking of the CPR = 1-(1-SMM)^12 ^ & SMM = 1-(1-CPR)^1/12 formulas from the Mortgage Backed Securities reading?
Any shortcuts to remember different factors in the proter’s five. There are just so many factors to remember. How did you guys internalize them?
Put call parity for equities is made up of four components. The trick to memorising them is that they’re in alphabetical order.
Bond, call, put, stock
B + C = P + S
For put-call parity with a forward, remember a forward is F/(1+R)^t, and a bond is X/(1+R)^t, so substituing a stock for a forward, you get:
(X - F)/(1+R)^t + C = P
Do we need to know the ABS / SMM formula? i thought it was an explain LOS only?
Autocorrelation test: Durbin-Watson.
Durbin-Watson is the ONLY test that has all the letters A-U-T-O in it. d U rbin-W AT s O n
And it has each letter exactly once. Also, wATSOn kind of looks/sounds like AUTO.