Implementation Shortfall

Probably been discussed ad nausium, but what a b!tch this concept is. Guaranteed this will be the section this year that I memorize all these freaking formulas for and they go and ask a qualitative question about it.

Portfolio/Currency Attribution is also a pain.

Agreed, I don’t understand the point of making us memorize all of these pointless formulas.

I actually prefer the formula’s. At least you know it is right or wrong vs. the subjective nature of some of the other material - “i.e. is it above average risk, below average???”

I’m actually hoping for some atribution donkey work questions after the shi**y questions I’ve faced so far in seemingly harmless parts like MBS and immunization.

See the Last question I think on the 2006 Exam. I calculated all of them correctly except for the Missed Trade Opportunity Cost b/c they calculated it differently then all the rest. They wanted a per share basis and not a % basis, but they do something different for the Miss Trade costs than for Delay Cost/Trader Costs and Realized P&L/Mkt Impact Costs Give it a try.

agree, but I think the tricky part is not the “per share” calculations, but that they give you the price at which you finally buy, and both the closing price that day and the closing price 15 days later, and for the missed opportunity cost the use the second one (I would have got it wrong, honestly)

Yes, they use the 15 day number, but that’s not the sticking point…the fact that they divide the Unfilled Share/ Order shares which they didnt do for the others (Filled/Order for the first 2)… So all of a sudden they include the fraction which they ignored for the other 2 implicit costs… What’s their reasoning… That’s why I got $1.80 vs $2.00 b/c the extra $0.20 came from the last fraction…grrr.