Must Know Topics for 2008 L3 Exam

It might be a little early to start this list, but an early start is worth it. Repeaters and new comers feel free to chime in. Please try to be as specific as possible: 1) Implementation Shortfall (with all the little nuances, etc.)


I second that: EVERYTHING is must know! Your implementation shortfall question can be worth as much as some obscure topic in the readings.

The purpose of this post is to not ignore topics which are important for the exam. Obviously, you are not going to spend as much time on some obscure topics as you are going to spend on important topics (ie implementation shortfall) for exam. If you have all the time in the world and don’t work, sure, you will learn everything inside and out.


As far as I can tell, these exams more or less randomly choose from LOS.

Develping return and return objectives . Guaranteed

^ You mean risk and return objective?

No, I just wanted to emphasize the fact hat return objective will be on the test.

Total return calculations…asset returns, currency returns, when to hedge and when not to!!!

for L1 and L2 (especially for L1 everything wasn’t must know) I passed level 1 by totally skipping statistics, and second half of derivatives. Didnt even read. for level 2 though I had covered everything. Fewer the number of questions more risk you take by skipping. So I donno about L3 yet.

Some of the more exotic areas showed up last years essay paper: Black-Litterman, Grinold & Kroner model. So it is best to master many concepts as possible as its difficult to guess which topics would eventually show up.

GIPS… hands down

  • Corner Portfolios - Grinold and Kroner - Singer Terhaar Analysis

if you remember L2 last year, they had practically no questions from two absolutely core stuff: Multinational Corporations and MBS, came loaded with questions from peripheral ABS. In the L1 in 2006, they had no questions in hypothesis testing.

Micro attribution, VAR analysis, constructing a strategic asset allocation for a client, in addition to those already stated above. Btw, what does that leave out? :slight_smile:

  • Singer Terhaar Analysis what is that ??

It’s some method of calculating risk premium for a market … I think in SS#7…

I think its: = Dividend Yield - Change in Shares Outstanding + Inflation + Growth + Change in P/E.

That’s G-K.