Vignette: Balance sheet and IS is given in an emerging markets. a) Figure out the translation loss / gain b) Figure out the real - nominal rates c) figure out the FCFE using 1/2 stage models. BOOM! i hate all three topics.
Pepp if this actually shows up in exam, I will kick your ar$e
Didn’t it say that we don’t need to actually “perform” B, just that we need to know how it’s done? Fairly certain Schweser said that, but walked us through the five page example “just so we could have a better theoretical grasp”, no?
i’m cool with A and C
LOS 17a states Define exchange rate and distinguish between the nominal exchange rate and the real exchange rate.
Schweser also says they won’t ask you for calculation on Black - S model but in some of the practice exams they have asked us. they also say in PM, they won’t ask you to calculate std.dev of portfolio with 3 securities but in sample exam CFAI has asked us to do that calc. Just mark C for that and move on. I am sure that most of us find that material tough so not many candidates going to ace that vignette for sure. Now what is 1/2 stage model in FCFE…don’t remember. Translation loss/gain shouldn’t be tough if you review that once.
Yeah, what the fugg is a 1/2 stage?
oh when this vignette appears, for the sake of completenees, other three question may belong to a) Interest rate parity / currency forwards /futures b) earnings quality c) and perhaps a theoritcal question on the credit rating for that company.
I meant to say, one stage or two stage FCFE.
pepp Wrote: ------------------------------------------------------- > oh when this vignette appears, for the sake of > completenees, other three question may belong to > > a) Interest rate parity / currency forwards > /futures > b) earnings quality > c) and perhaps a theoritcal question on the credit > rating for that company. i think except b, I would be able to do fine.
“I meant to say, one stage or two stage FCFE.” Thank the fugging Lord; had me worried I missed a section.
Real Exch Rate = Nominal(Pd/Pf) Pd = Price of domestic good Pf = Price of Foreign good.