FRA..you think it'll come up in the exam?

CFA Level II
#1

Just speculating…Do you think it’ll come up?

I’m having difficulty with remember the formula and understanding the pricing of an FRA…Seems like lots of h, g, m etc…zzz

#2

You using Schweser? I just reviewed the reading on Forwards yesterday and, while Schweser has a lot of shortcomings at L2, they really did well on Forwards. They explain how to value an FRA at any point using steps, rather than a massive formula. I highly recommend you check it out!

#3

Interestingly, I was just covering this in my class last night. Forwards, futures, FRAs, swaps – they’re all pretty easy if you break them down into individual steps. As mentioned above, Schweser does a good job (except that, as with the curriculum, they don’t explain the reasoning behind the formula for valuing a currency forward, which a candidate should understand).

I can walk you through the steps if you like.

Yes, I think it’s likely to come up on the exam.

#4

thanks!!! I’ll take another look at the schweser material over the weekend. I was quite sure I understood the FRA during the frst read…I think the CFAI confused me slightly.

#5

I also read CFAI my first time through - that formula for an FRA is silly…look at Schweser’s explanation.

#6

I could see derivatives having 3 item sets. I have no basis for this other than my opinion and there are 6 readings.

#7

Derivatives will be 1 - 3 item sets. Whether this is the year they give you the minimum, push it to the max, or languish in the middle is anybody’s guess, nothing more.

That said, I’d study derivatives as if there will be three item sets; it’s too big a risk otherwise.

#8

Derivatives usually 2 item sets. Fra most important topic for study session on futures and forwards don’t skip

#9

FRA and swaps are two things i wouldn’t joke with

#10

.

#11

Neither one has displayed a sense of humor.