Am getting bummed in the mock exams in Fixed Income and Equity…any pointers?? Am not being able to get a handle on the practical questions involving calculations inc duration yield etc…any tips??
Just go through all the examples in the CFA texts and solve the EOC Q’s. That should do it in all honesty. If you still struggle after that, then God Bless you!
Really do need the big man upstairs to help me out here!!
savage is there a specific topic you keep getting wrong or are not understanding? what types of problems are you getting incorrect each time?
normally if its any of the calculations you can draw out arrows, diagrams, whos the fixed rate payer, time line, and duration formula(remember it) it makes things much easier. hope that helps a little.
25 yr 1000 par semiannual bond 7.5 percent coupon and 9.25 percent yield. based on yield change of 50 basis points effective duration ?? what is the deal with basis points…25 basis points is used in formula calculations as .25 or .0025 or what and how??
See 100 basis points = 1% = 0.01 so 25 basis points = .25% = .0025 Therefore in the prob you mentioned, 50bp = .5% Calculate the PV when the yield is decreased by .5% (I/Y = 8.75%)and PV when yield is increased by .5%(I/Y = 9.75%) and then use the Effective duration formula. In the Eff Dur formula, sub .005 for (delta y) or change in yield.
dont confuse .25% with .0025, remember that when basis point is used it wont be bigger than 1% majority of the times(ie they’ll just say 1.5% given that the whole time they WERENT using basis points) the dude man above explains it very wel