the text implied it was unlikely that they would need to pay the tuition, and besides, that was 14-16 years away.
in a practice exam, they had a similar situation where expenses come out of portfolio. so i put down below average in the sample exam. but it was wrong. the reasong they gave was that age trumps much of everything else.
I went average based on their CURRENT situation. Yes they will get money down the road, but other events can happen during that time. Because the portfolio had to be utilized to meet CURRENT living expenses (mortgage), I went average.
Jed Wrote: ------------------------------------------------------- > I think there were below average overall. > > They needed ~9.5% to cover mortage & inflation, > right? That’s a pretty high liquidity need. > > Also, the windfall is pretty much a wash vs. the > possible need to pay the tuition. The liquidity need is only 55000 and that will be easily covered by portfolio income. The return needed to overcome inflation is not a liquidity requirement.
emarkhans Wrote: ------------------------------------------------------- > > 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. I think the first part involved a market or limit order and you had to decide which one. There was also a principal trade vs crossing networks trade part so maybe it was worth more than 14 pts. I can’t recall which questions were which any more.
I picked principal trade for that one ( the trade size was very large compared to average daily volume and most holders were institutions, so you need someone to shop the trade around for you). The other one was market order, because of the time sensitivity of the information (press conference the next day) and the small bid/ask spreads.
I was extremely prepared for the exam, but thought the morning session didn’t give nearly enough time. I did first 5 questions and then they announced that 30 or 45 min were left (I don’t remember which) and I rushed through the rest and felt completely horrible. I left at least two essays completely blank. I feel cheated by the CFI and I agree with a lot of people that I lost a lot of respect for the CFAI whether or not I pass or fail. I think people who took the morning session and did every problem quickly without much depth or insight will do way better than people like me who gave good diligent answers but barely got through more than half the test. I’m very disappointed and feel that my endless hours of studying plus my day was wasted. Part of me is praying for a big morning curve. But I can’t imagine passing after essentially leaving 25% of the test blank.
I went with the crossing network due to the long time horizon and the lack of price discovery means it would have minimal market impact. mo34 Wrote: ------------------------------------------------------- > I picked principal trade for that one ( the trade > size was very large compared to average daily > volume and most holders were institutions, so you > need someone to shop the trade around for you). > > The other one was market order, because of the > time sensitivity of the information (press > conference the next day) and the small bid/ask > spreads.
was there a question on manager’s performance vs the benchmark or am I hallucinating?
mo34 Wrote: ------------------------------------------------------- > I picked principal trade for that one ( the trade > size was very large compared to average daily > volume and most holders were institutions, so you > need someone to shop the trade around for you). > > The other one was market order, because of the > time sensitivity of the information (press > conference the next day) and the small bid/ask > spreads. When there are a number of institutional investors and you dont need to complete the order right away ECN is the best way to go
Hi Guys please dont give me another heart attack now the last question i remember doing in Am was about to companies claiming styles for their bond manaegment…IR management etc etc and tha was question 10… i gave the exam in asia…did I not even look at qquestion 10? or am I wrong regarding the question number (i hopw the question i mentioned is question 11 then)… and guys what are 2 retruns of a reverse cash and carry strategy…i think risk free return and spot return… i screwed it up very well in AM…
One more thing about the risk-ability… if I’m not mistaken, they could have pre-paid the rest of the mortgage from their portfolio and have plenty left over.
comp_sci_kid Wrote: ------------------------------------------------------- > mo34 Wrote: > -------------------------------------------------- > ----- > > I picked principal trade for that one ( the > trade > > size was very large compared to average daily > > volume and most holders were institutions, so > you > > need someone to shop the trade around for you). > > > > The other one was market order, because of the > > time sensitivity of the information (press > > conference the next day) and the small bid/ask > > spreads. > > > When there are a number of institutional investors > and you dont need to complete the order right away > ECN is the best way to go The trade was very large compared to the volume, I remember 100000 shares to be traded and the average daily volume in 120000. You’re not going to get this filled in thousand year on an ECN.
I had principal trade and crossed it out; second-guessed myself because of the institutional investors. (&@$$ Thought I actually had done decent on morning now my stomach is upset.
mo34 Wrote: ------------------------------------------------------- > comp_sci_kid Wrote: > -------------------------------------------------- > ----- > > mo34 Wrote: > > > -------------------------------------------------- > > > ----- > > > I picked principal trade for that one ( the > > trade > > > size was very large compared to average daily > > > volume and most holders were institutions, so > > you > > > need someone to shop the trade around for > you). > > > > > > The other one was market order, because of > the > > > time sensitivity of the information (press > > > conference the next day) and the small > bid/ask > > > spreads. > > > > > > When there are a number of institutional > investors > > and you dont need to complete the order right > away > > ECN is the best way to go > > The trade was very large compared to the volume, I > remember 100000 shares to be traded and the > average daily volume in 120000. You’re not going > to get this filled in thousand year on an ECN. it was a long period. Ofcourse you would get this filled.
For FI markets, if the order is large or illiquid you always shop it through the street (using brokers)…
I don’t remember the 6-month part. Maybe I missed this info. But I believe the size was too large anyway for anything conventional/electronic. we’ll find out when they post the answers.
anyone go with limit orders for the 6-month rebalancing trade? they have time to rebalance, who cares of its intitutional counterparties or not, why not take the 6 months and get best price using limits?
frisian Wrote: ------------------------------------------------------- > One more thing about the risk-ability… if I’m > not mistaken, they could have pre-paid the rest of > the mortgage from their portfolio and have plenty > left over. I stongly feel that the answer is below average. Almost 1/3 of household income is met from the portfolio. I think that is the dominant factor. Obviously, once the next trust distribution arrives and the inheritance is banked, that would change ability to assume risk. However, neither of those things alter the fact that they need 55000 from investable assets of 995000. The argument that they could buy the house outright and have income = expenditure is uninteresting. The objectives have been set; they are making a 30% downpayment and want 55000 from the portfolio. Period.
i have the same take - below avg for first 10. trust could get hammered before they receive 2nd bit. inheritance could go poof if parents do something stupid. kids could fail exam. so forget the ‘could get this in future’ parts. waddaya got today? i even set aside the 55k first yr motgage paymnt as liq need, so assets were 940k on mine. trick was they only wanted to protect the 500k cash from inflation, so to add full 4% inflation on top of fixed 55k each year, was a leap of faith.