Think its about time to stop digging into details and start memorizing.

Formulas

Graphs

Tips and tricks

Notes
Think its about time to stop digging into details and start memorizing.
Formulas
Graphs
Tips and tricks
Notes
Agree  has to be the strategy now for ‘weak’ areas Anyone have tips/tricks for EAR calcs? Like a foreign language to me…
Secret Sauce and quick review of EOC’s for me
review all mock questions i got wrong, do all IPS one more time to practice the return calculation, and go over weak areas that I made a list of (today and tomorrow). Thursday will be one last review of flashcards, friday, one more read through the asset manager code and maybe a bit of GIPS but calling it early to relax and get ready…
whisper whisper : what is EAR lgirl?
are you referring to EAR when combining a put or call with a loan, or when doing total return analysis?
and yes, definitely do Ethics! I have been postponing Ethics till date, but now is the time  2 out of the 10 vignettes is still a lot of marks! It’s also the borderline decider
I’m at the point where I just want to torch everything
Ethics/GIPS today (could there be a more painful day?!), review mocks tomorrow, do one final AM, and lots of flashcards.
Yep. At this point there should be no suprises / new material, just memorization and refining one’s understanding.
Today: Review CFAI Mock PM Exams
Tomorrow: Review 2009  2011 AM Exams
Thursday: AMC & Corp Finance
Friday: Ethics, a few flashcards, reivew about 10 formulas that have been hard to memorize. Look at PM Exams again to refresh on a few calculations.
Sat morning: Wake up early, eat breakfast, knock this mofo out.
Yep… time to memorize about 30 acronyms
use the calculator much easier:)
EAR for borrower who purchases a call option:
Calc compound call premium = cost of call * ((1 + (Libor + Spread) * (days til expiration of option / 360))
Calculate interest due on loan = notional principal * (Libor + Spread) * (days in Libor / 360)
Calculate option payoff = notional pricnipal * (Libor  exercise rate) * (days in Libor / 360)
Calc net loan amount = loan amount  cost of compound call premium
Calc effective interst = int due on loan  option payoff
EAR = (notional principal + effictve int / net loan proceeds)^(365 / days in Libor)  1
That’s not really a tip/trick, but that is how you do it. *Fixed*
should be cost of call * ((1 + (Libor + Spread) * (days til expiration of option / 360))
SHOULD INSTEAD BE notional principal * (Libor + Spread) * (days in Libor / 360)
should be
notional pricnipal * (Libor  exercise rate) * (days in Libor / 360)
This line 6 was the only place where the POWER was correct.
[/quote]
This line 6 was the only place where the POWER was correct.
[quote=“drewd313”]
Ha ya your right, my bad. I think I would have realized that if I was actually doing the problem, but just typing it out I got a little carried away with the POWER.
I know that happens quite a bit.
And given the number of calculations … it is quite natural.
And as a natural extension.
On the IR Put:
You pay the Put Premium, as well as take on the Loan. So at time 0 your outflow = © Loan + IR Put Premium adjusted for the time when you decided to take on.
At the expiration of the IR Put:
You pay the A) Loan Interest + Principal = Principal * [1+(LIBOR at Last Reset + Spread) * N/360]
You pay the B) Put Payoff = Principal * Max([Strike  LIBOR at Last Reset],0) * N/360
Calculate [(A+B)/C]^365/N  1 = EAR
In one of the exams the constructed a collar around the loan. so two payoffs, two premiums (or net premium)  be prepared
I got about 400 flashcards I need to get through  thursday and friday is going to be pure cramming those! I know about 60% of it.
hmm…I think this is one area of the text I will be PRAYING does not come up in meaningful size!
For borrower: [(1 + lowest of rates) * Principal / (Principal  FV of option premium at expiration)]  1
For lender: [(1 + highest of rates) * Principal / (Principal + FV of option premium at expiration)]  1
Use appropriates rates and annualize.