hezagenius Wrote: ------------------------------------------------------- > itstoohot Wrote: > -------------------------------------------------- > ----- > > how many points for VWAP, impl sf?? > > > I think 14 total. First part was 6 and then the > last two where you had to decide which one should > use VWAP and which one should use Imp. Shortfall > were 4 pts each. What was the first part? I completely f’d up the VWAP/shortfall part in a totally amateurish way. Maybe I got lucky with some of the incorrect reasons; I know I didn’t get the correct stocks, and it’s such an easy question, too. The essays were the first time I’d felt any time pressure on any of these exams (a shared experience, I’m sure), and it showed.
sandy_capone Wrote: ------------------------------------------------------- > 7 + 2.5 = 9.5; 9.5 - 6.5 = 3 excess return Required return less the discount rate on the liabilities was the concept here, right?
Corrupted Wrote: ------------------------------------------------------- > Corner Portf: 3-4? then 107% for the 2nd Q? That’s what I got. CFAI really should be called to task for the trick they put in that one. Cost me time. (But then again, so did putting the weights for every asset when they were just asking for equities.)
ChiTownShane Wrote: ------------------------------------------------------- > They better give almost full credit for those who > used geometric calculations vs additive for corner > port problem. I may even write a preemptive > letter. That was a ridiculous trick. They MUST have meant additive; the other way wouldn’t even have worked.
FlamesFan Wrote: ------------------------------------------------------- > What was everyone’s guess as to the overall risk > tolerence for the individual portfolio. I said > above-average. Above-average – young, decent wealth (trust of 6/12 years salary or so), “substantial” inheritance down the road. They had both wealth and age. The kids’ education may have changed things, but that was completely uncertain. If CFAI says it’s anything else but above-average, they’re wrong, not us.
Damosin99 Wrote: ------------------------------------------------------- > Leaving qu1 for last definitely worked for me as I > came back to it at the end with 45min to spare. > Wasted a LOT of time on the coner portfolio > question. Came back to it again at the end as i > couldn’t get the SD below 10% (same prob as others > were saying). I tried lots of different portfolio > combos but couldn’t gt anything below 10%. Didn’t > really know bond attribution either… Bond attribution was a dead-on anti-Schweser question. Schweser didn’t even touch the part about what “unexpected” is.
I went for above average. Probably only 1 or 2 points for that bit though…
What was the “alternative investment” part on AM from the earlier list? I’m drawing a blank.
emarkhans Wrote: ------------------------------------------------------- > Damosin99 Wrote: > -------------------------------------------------- > ----- > > Leaving qu1 for last definitely worked for me as > I > > came back to it at the end with 45min to spare. > > > Wasted a LOT of time on the coner portfolio > > question. Came back to it again at the end as i > > couldn’t get the SD below 10% (same prob as > others > > were saying). I tried lots of different > portfolio > > combos but couldn’t gt anything below 10%. > Didn’t > > really know bond attribution either… > > Bond attribution was a dead-on anti-Schweser > question. Schweser didn’t even touch the part > about what “unexpected” is. They did actually… the line underneath where they wrote that the expected part is the risk free benchmark assuming no change in forward rates…
And for 10 years, the expenditure of the family will exceed income by 55000. Therefore I think below average is the way to go.
Etienne Wrote: ------------------------------------------------------- > And for 10 years, the expenditure of the family > will exceed income by 55000. Therefore I think > below average is the way to go. yea i said below avg, generating portfolio return is the only way to payoff their mortgage, and they had all their investments in short term savings
unexpected… or expected?
yea i said below avg, generating portfolio return is the only way to payoff their mortgage, and they had all their investments in short term savings _________________ ditto
But the mortgage was fixed and not growing with inflation. Therefore, as the portfolio grows, the required return to pay the mortgage would decline, right?
Etienne Wrote: ------------------------------------------------------- > And for 10 years, the expenditure of the family > will exceed income by 55000. Therefore I think > below average is the way to go. If you’re 20 years old making 20K a year, you have a mortgage of 100K a month, and a trust fund of 5 trillion dollars, you’re risk tolerance is below average? They probably could have bought the place with cash once the second phase of the trust came in.
emarkhans Wrote: ------------------------------------------------------- > Etienne Wrote: > -------------------------------------------------- > ----- > > And for 10 years, the expenditure of the family > > will exceed income by 55000. Therefore I think > > below average is the way to go. > > > If you’re 20 years old making 20K a year, you have > a mortgage of 100K a month, and a trust fund of 5 > trillion dollars, you’re risk tolerance is below > average? > > They probably could have bought the place with > cash once the second phase of the trust came in. their asset base is only 995k, if their portfolio doesn’t come up with the mortgage payment they lose the house they obviously have below avg willingness for risk if up to this point all their investable assets are in risk free short term savings
emarkhans Wrote: ------------------------------------------------------- > Etienne Wrote: > -------------------------------------------------- > ----- > > And for 10 years, the expenditure of the family > > will exceed income by 55000. Therefore I think > > below average is the way to go. > > > If you’re 20 years old making 20K a year, you have > a mortgage of 100K a month, and a trust fund of 5 > trillion dollars, you’re risk tolerance is below > average? > > They probably could have bought the place with > cash once the second phase of the trust came in. Problem is: you have to stay solvent. e.g. most of the people on this board (including myself, I hope) have a high NPV. But cash is king and I have yet to be offered the black Amex.
Did anyone say in the pension one that the company’s financial condition vs. the industry wasn’t that bad because of the better-than-industry-average debt to asset ratio? I did; all the other metrics where it performed terribly weren’t really pension metrics.
above average is what i got. their willingless to take risk wasn’t clear though.
Etienne Wrote: ------------------------------------------------------- > emarkhans Wrote: > -------------------------------------------------- > ----- > > Etienne Wrote: > > > -------------------------------------------------- > > > ----- > > > And for 10 years, the expenditure of the > family > > > will exceed income by 55000. Therefore I > think > > > below average is the way to go. > > > > > > If you’re 20 years old making 20K a year, you > have > > a mortgage of 100K a month, and a trust fund of > 5 > > trillion dollars, you’re risk tolerance is > below > > average? > > > > They probably could have bought the place with > > cash once the second phase of the trust came > in. > > > > Problem is: you have to stay solvent. > > e.g. most of the people on this board (including > myself, I hope) have a high NPV. But cash is king > and I have yet to be offered the black Amex. They’re totally solvent and no way they could have become insolvent. They have immediately available assets that more than cover the full cost of their house and they only needed the portfolio for the house. They could have paid cash for the house, had some left over, 750K more coming in 10 years, and a substantial inheritance also to come. If they had a bad year and got itchy, they would still have had plenty to pay off the house in full.