Hi all, can someone help me with this question. I don’t understand the answer.
According to the answer:
Node 2-2 is the middle node rate in Year 2, so it will be closed to the implied one-year forward rate one year from now.
This middle node is in year 2. Why is it not closed to one-year forward rate two years from now? why one year from now?
Thanks a lot!
The CFA curriculum is in error here, and you’re correct.
I talked with them last year about this. They finally admitted that it was an error. I’d hoped that it would have been corrected. Perhaps it’s in the errata.
oh really? Thanks so much S2000magician for letting me know!!! I have been struggling since yesterday lol.
Btw did you find fixed income really difficult in the exam? fixed income is not by strength
But I took the exams while I was analyzing mortgage-backed securities at PIMCO, so I had a bit of an unfair advantage.
Gosh, so happy to find this thread. I was on FI last month and I still remember I had this same question and racking my brain on it. I checked curriculum errata from time to time, I just don’t understand why they do not update the errata. These things are so annoying especially with self study where you don’t really have the opportunity to ask back so you finally must assume that you are wrong and the book must be right.
OK we have this forum, and S2000. Huhh.