I saw this topic come up for past years. It’s crazy how much different past years are to this one, I saw formulas that we just don’t go over this year.
Anyways, I think it’s a good topic since we are low on time. I’ll start off with:
The crazy Treynor Black formulas you don’t have to memorize. LOS just says “describe the steps and the approach”
Ideally I would just look at the LOS and see which ones say calculate and which ones don’t, but I don’t have all my books on me. Do you guys know of any that you almost wasted time memorizing? As an aside, can you guys confirm that if its not on the schweser quicksheet we don’t have to memorize?
Definitely NOT the case. That quicksheet is a good overview of the most important formulas and concepts. There is no way all of the formulas that are fair game could fit on that sheet. At least that’l my opinion.
Beyond “Calculate” if it says “Evaluate” you should probably know the calcs there, or at least know the comparative statics of the concept (e.g. if variable x increases, does that increase/decrease/uncertain y?).
I really think studying concepts is a better use of time than weird formulas - CFAI in the past (for the most part) stresses the concepts more than knowledge of obscure formulas.
Not to say there won’t be ANY obscure formulas - but the bigger marginal gains are probably in knowing the concepts really well. Hard to predict what they’ll throw at you.
Think of how many questions on the exam don’t require a calculation/formula if you understand the concepts. Just a thought.
I think you’re probably right on with what you’ve planned to memorize/not memorize - that’s one of the key things you learn in L1. Throw out the garbage.
Derivation questions (“Which is the proper formula for xyz concept”) seem to be pretty rare, if they do one I would think it’s on put/call parity or one of the derivatives (e.g. what’s the proper calculation of the value of this forward rate agreement).
Hi S2000 - first thanks so much for everything you do here, you are amazing
It’s kind of strange Schweser’s end of chapter challenge problems ask us to do Treynor calcs - they just doing that to cover their bums from last year? I was ticked when I saw that at the end of the chapter.
Elan video seems to cover it in detail and says to know how to do the weights.
But I think the LOS are pretty clear that Treynor calcs are not required. I am planning to just know the basics of what the Treynor does and how it is estimated with the regressions etc.
Knowing how to do the weights is all there is to this model. To be fair I don’t know what the big deal is. All it does is guideline security additions by accounting for return and discounting for risk. Big breakthrough…
I haven’t a copy of the curriculum, but someone here said that there’s a footnote that you don’t have to be able to do the calculations. Just understand the theory and assumptions.
Thanks S2000, that’s more assuring - here’s the LOS from CFAI (there are just 3).
They seem pretty basic and I would really be surprised if there were any calculations required this year.
READING 55. THE THEORY OF ACTIVE PORTFOLIO MANAGEMENT The candidate should be able to: a justify active portfolio management when security markets are nearly efficient; b describe the steps and the approach of the Treynor-Black model for security selection; c explain how an analyst’s accuracy in forecasting alphas can be measured and how estimates of forecasting can be incorporated into the Treynor-Black approach.
I disagree that they cannot ask treynor calculation, because its there is complete vignette on end of chapters as well in cfa books, u better read once & understand, u never know with cfa exam, they may give full vignette on that.
I highly doubt there would be anything more than a single question relating to what it’s used for. Remember, the CFA WANTS people to pass, they just want to make sure those that do are deserving of the designation.
how about people who keeps getting band 10, are they any less deserving than a passing candidate who did 1 more question correct out of 120? I disagree that CFAI wants to pass people, if not they would host the level II exam twice a year!
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