I don’t know about you guys, but I’m finding fixed income to be the hardest material in the exam, followed closely by derivatives. IPS stuff and behavioral stuff is *tricky*, but I don think its inherrently difficult stuff. What say ye?
hardest is emerging markets and economy. to answer directly to guidlines you just need to get lucky
bchadwick Wrote: ------------------------------------------------------- > I don’t know about you guys, but I’m finding fixed > income to be the hardest material in the exam, > followed closely by derivatives. > > IPS stuff and behavioral stuff is *tricky*, but I > don think its inherrently difficult stuff. > > What say ye? I would have to agree with all of this. Anything with a list or detailed description I usually freeze.
What part of fixed income and derivatives? Is there any indication the 2 bond hedge will be on there? That one is a toughy… Also, what part of econ and emergign markets? I’m wondering if I only skimmed some important topics that could be on the exam.
I pray that the 2-bond hedge is on theere, plug and chug
bigwilly Wrote: ------------------------------------------------------- > I pray that the 2-bond hedge is on theere, plug > and chug agreed
What is the formula for the 2-bond hedge?
Search for it, I did an example a week or so ago. PJ might have it bookmarked 
I guess I’ll be reviewing two bond hedge. I remember it wasn’t that difficult, just a lot of calculating. comp-sci-kid, what part of econ and emerging markets did you think was hard?
everything 
i am terrible at memorization
no bothering with 2 b h… if it hits, I will guess and save the time for other questions.
It’s a bit tricky searching for this with all the “search for it” noise comments, but I found it in the end. bigwilly’s words below. Essentially create two simulatenous equations and solve them. bigwilly Wrote: ------------------------------------------------------- > Ok, I snuck this one in with time…You’re luck; > > Let’s pretend that the Absolute Average Price > Changes are provided as such: > > Yield Level Yield Twist > MBS 1.50 0.25 > 2Y Treas 0.50 0.30 > 10Y Treas 1.75 0.40 > > Now setup equations as follows: > > -1.50 = 0.50*w2 + 1.75*w10 > -0.25 = 0.30*w2 + 0.40*w10 > > You want the MBS’s values to be negative b/c you > are hedging. > > Now solve: > > -1.50 -1.75*w10 = 0.50*W2 > W2 = -3 – 3.5*w10 > > Now input w2 into the other equation > > -0.25 = -0.30(-3-3.5*w10)+0.40*w10 > -0.25 = 0.90 + 1.05*w10 + 0.40*w10 > -1.15 = 1.45w10 > W10 = -07931 > > Now solve for W2 > > -1.50 = 0.50*w2 + 1.75*(-0.7931) > -0.1121 = 0.50*w2 > W2 = -0.2242 > > So you will Sell -0.7931 10Y Treasures and Sell > -0.2242 2Y Treasuries. Of course these amounts > would be multiplied by the Notionals…. > > Does that help. > > If they give you price changes…You want the > Absolute Average, for instance if original price > is 100, and we increase 100bps and it goes to 98.5 > and then we decrease by 100bps and it goes to > 101.5, the Absolute Average price change is +1.50.
they would never ask this.
I’m praying for pension WACC, 2BH, micro, macro and global attribution and a ton of options stuff. I suck at IPS.
IPS Blows.
i dont think youll see pension WACC or 2BH. The Los’s for those sections dont say evaluate, calculate, or demonstrate. All the Performance is possible though, and all the options stuff