Got this feeling about the exam

CFA Level III
#1

The Risk premium approach has been tested in the 2013 mock exam. IT was a specific case of a bond-yield-plus-risk-premium. They did not specify that

I have that feeling that they will ask a very similar question, but for fixed income , with the exact same ehxibit.

so please know the difference between the fixed income approach and the equity approach of the Risk Premium approach

#2

and how to find it for fixed income?

#3

awww I tought you guys would have searched for it :frowning:

for fixed income :

Real risk free rate ( treasury or very short maturity ) + inflation premium + default premium + illiquidity premium + maturity premium

#4

RIDIMT = Risk Free + inflation + Default + Illiquidity + Maturity + Tax

#5

^^ legend :).

#6

thanks Bilal and CPK!

#7

bleh.

#8

TIMID R

#9

I will now remember that.

#10

And for equity? Is there a funky shortcut?

#11

RFR + DILMT. “Dil-Mit”. I don’t know what that is but it stuck for me.

#12

10 year treasury yeild plus equity risk prem?

#13

RE - risk free + equity premium

#14

I get the feeling they’re going to ask everything I’m not well prepared for like they did for level 2.

So I’m paranoid about there being a question asking for currency contribution. And if they ask for multiperiod attribution, then I’m screwed. I need to review that. And taxes… And global bonds.

#15

SO what is the equity approach?