Curveballs + things often overlooked

I know that we already had such a topic here, but it went out of control ;D

Post your ideas or “secrets”, which issues might be curveballs in the exam or things that are often overlooked.

For example a classic: Grinold-Kroner model --> equity repurchase yield = - Δ shares outstanding.

CPPI = letter “U”

With market decreasing you sell until you reach the floor : Left side of the letter

With market increasing you buy untill is goes uuuup : Right side of the letter

I got this from the forum which has been pretty helpful.

SAMURAI and McBARFS for the characteristics and types of benchmarks

For Singer-Terhaar: Integration correlation

H-Model: Use D0 not D1

From GoStudy notes (which by the way I think we pretty damn good… took a chance with the $50 and it was worth it):

Emotional Biases: LOSERS

Loss Aversion

Over Confidence




Status Quo

All the rest are cognitive.


Passive Preserver

Freindly Follower

Independent individualist

Active Accumulator

In order from most risk averse to least with the Individual being a solo artist and most difficult to advise.

Type I - keeping bad

Type II - firing good

Ho = manager adds No Value

When you see a problem involving an equation like grinold kroner, taylor rule, yardeni, etc… make sure you double check what they’re asking and verify the inputs are correct. Usually, there’s a second step involved or some type of data transformation that needs to be performed. These equations are easy to memorize so they’re not just going to lob softballs at you.

I love LOSERS. Good one, thanks.

Cognitive Biases: CC’RIH(der) and FAMA

Emotional Biases: LOSSSER

Benchmark: SAMURAI

for singer terhar i’ll add: don;t forget the illiquidity premium

Duration of the portfolio = asset deuration (recievied ) - liability duration (paid). - to convert currency from US to Euro using this US/Euro then divide AS */* INDICATE. Otherwise multiply.

for singer terhar i’ll add: don;t forget the risk free rate:)

2013 cfai exam on taxes. Minimum eligible amount for distrubition

Spelled out that wife is eligible for max of community property/forced heirship. However, took the lesser of the two due to the “minimum eligible amount” wording. If you don’t know this stuff 100% if you strike out (I’m talking everything - even Cobb douglas/fed model/etc)

how can they test on this stuff… unless they told you… every country has different laws…

TLT LU (i just remember this because TLT is the 20 year bond ETF, and LU is how every Luxembourg denominated ISIN code starts) i know this is probably not very helpful for most, but for those who see this stuff day in day out at work it might be a good way to memorize, works for me.

Time horizon

Liquidity needs

Tax Considerations

Legal and Regulatory

Unique Needs

and don’t forget the weights of segregation vs integration while calculating risk premium…

Straddle + a call = strap

Straddle + put = strip

SAMURAI isn’t accurate anymore. There is only one “A” in the text now. The other “A” became an “O.”

Owned and Accountable are the same.