It’s kind of stupid, but that’s how they define it in both Schweser and CFAI. Let me try to remember this. An asset class is something that can generate revenue, think dividends for stocks, coupons for bonds. If an entire investment is speculative, then it might not be considered an asset class. In the case of positive roll yields, revenue is generated in backwardation as the spot price converges to the futures price. If we are in contango, we can kiss that goodbye, meaning there isn’t positive revenue generated. Does this sound right guys?
TheAliMan Wrote: ------------------------------------------------------- > It’s kind of stupid, but that’s how they define it > in both Schweser and CFAI. Let me try to remember > this. An asset class is something that can > generate revenue, think dividends for stocks, > coupons for bonds. If an entire investment is > speculative, then it might not be considered an > asset class. In the case of positive roll yields, > revenue is generated in backwardation as the spot > price converges to the futures price. If we are in > contango, we can kiss that goodbye, meaning there > isn’t positive revenue generated. Does this sound > right guys? so if I just bought a piece of land to speculate that the value will go up some day and I can sell it…that would not be considered an asset class?
I was just thinking about that as I typed that to you. I’m not really sure :\
TheAliMan Wrote: ------------------------------------------------------- > I was just thinking about that as I typed that to > you. I’m not really sure :\ I will try and do some DD when I get home to get the answer. But I think for now just remembering positive roll yield is the reason commodities are considered an asset class will suffice.
16/20 - O for the century on the quant.
can someone please explain where the 0.48 comes from in Question 15.
.69^2=.4761
briiliant. thanks.
I don’t understand why Question 12 is C. If US currency depreciates relative to foreign currency, “those outside the U.S. will trade their currency for dollars in order to take advantage of the relatively lower goods prices?” Don’t countries want to buy from countries with lower-valued currencies because of their lower relative prices (i.e., exporters do well when currency is devalued)? Why would you want to exchange Chinese Yuan for Dollars if the dollar is deflating and the value of the dollar relative to the Yuan is soaring?
Question 12 - 89212 Under a system of flexible exchange rates, which one of the following is most likely to cause a nation’s currency to appreciate on the foreign exchange market? A) An increase in the nation’s domestic rate of inflation. B) An increase in real foreign interest rates. C) A decrease in the nation’s domestic rate of inflation. If there is no arbitrage that can be made from trading currencies, we would expect countries with higher inflation rates to depreciate to keep prices constant --> this is purchasing power parity. Suppose a shirt in Canada costs $100 CAD and $100 USD in the US (the current exchange rate is 1USD/1CAD). If inflation in Canada is high, a shirt might cost $150 CAD now. In order for the shirt to be worth the same amount in the US as it is in Canada, the purchasing power in Canada tend to decrease to 100/150 = 0.666 USD/CAD 150*0.66CAD/USD = 100. So there will be no advantage in buying a shirt in Canada or US How does the exchange rate move like this? In this case, inflation in Canada increased, shirts in Canada became more expensive, so people converted their Canadian dollars (increased supply) to buy more US goods (increased demand). This will cause pressure for the Canadian dollar to decline relative to the US
ok just caught up to this- got 10, 15 and 18 wrong. 10 was dumb, 15 i did not remember the formula offhand and 18 reminds me that I need a full day on alts next weekend. these were pretty mild though. thanks ditch for starting the week off without too much pain. f’n PM though. so many formulas, so few questions. grrr.
First time doing the daily lunch quiz: 16/20 Missed: 5,15,18,20 *I need to review stats big time, had no clue on 5 and 15. Question: Where do these questions come from, and for any level II retakers/people that know: how do they difficulty of these Qs compare to the actual test? Thanks, and best of luck to everyone!
the fact i usually get around 70 on these means they are pretty easy because i feel like dont know crap