Pink, you shouldn’t use that 3% RFR. Schweser specifically says “Risk free asset of their own company”
Oops misread it.
thepinkman Wrote: ------------------------------------------------------- > For Dinesh’s Q I seemed to have gotten the correct > answer a different way > > 3 + (.8*6) + ((1.2+1) * 2) = 12.2 > > They have > > 5 + (.8*6) + (1.2*2) = 12.2 > > Thoughts? RFR to be used here is 5% and not 3%
Yeah I thought it was from a US investor. Everytime I see USD in a question I immediately think they are the domestic currency.
So this goes back to my original confusion of when you use the +1 and when you don’t.
Yeah, I’ve missed quite a few for the exact same reason. I probably miss >50% of my incorrect answers due to those little details.
Join the club.
anyone check the erreta?
Baby work… A French investor holds a U.K. security. The investor has estimated the currency exposure in local currency terms to be 1.3. What is the currency exposure in domestic currency terms? A) 2.3. B) 1.3. Also please list what is the local currency, domestic currency and foreign currency here…
A! This is a preview of when the CFAI goes to the two question format.
LC UK DC EURO FC UK
“Baby work… A French investor holds a U.K. security. The investor has estimated the currency exposure in local currency terms to be 1.3. What is the currency exposure in domestic currency terms? A) 2.3. B) 1.3. Also please list what is the local currency, domestic currency and foreign currency here…” I refuse to answer this!!
LanceTX Wrote: ------------------------------------------------------- > LC UK > DC EURO > FC UK yes, and the answer is A
Although, it’s A, this is the exact situation in the original problem. YOu should add +1
Correct. Hope we get 120 such questions on the exam.
EDIT: Sorry posted the wrong question
guys how is it going? did we get an answer to dinesh’s question? are we adding the 1 or do we use the other rfr(5%)?