Im finding out that while doing the derivatives SS ( ie FRAs, Swap etc) my answers don’t match to CFAI… and its because i have my calculator set to 7 decimal places… how many decimal places should one set their calculators for the exam? does anyone know??
why do you set it to any number of places? set it to zero - do the rounding after you get your answer…
that is what I always did.
4 normally, 5 for currency-related calculations IMO
If you’re storing numbers while solving the problem, the # decimels displayed is irrelevant until the end.
I agree – the text assumes you’re using a slide ruler or something. I’m not worried at all though. The exam is so well prepared and QA’d that I think there’s little risk of losing points by being too accurate. Also, I’m guessing Derivatives in the CFAI mock will simulate the actual experience re decimels.
I keep mine at 4.
This issue with decimals I’ve noted since L1. In most cases it’s irrelevant which number of decimals you use, but in same cases it is relevant (esepcially in FX conversions). IMO, common accetable form is 4 (in rare situation 6) decimals. if you have millions or billions, it’s not relevant if you use whole or 000 number form.
When I just started reading the curriculum (skimmed through) I used to do the calculations (including equity TVM) in my head using rough estimates and then pick the closest answer. To my surprise my selection of answers were quite accurate.
My point? The exam does not test accuracy as much as concepts. So even with 7 decimal point accuracy if your answer differs then there are conceptual/formula mistakes, not accuracy issues.
It’s worth noting here that the reason you’re seeing different answers in parts of the Derivatives readings is probably due multiplying a factor by large notional principals. Anytime you do this, there can be some significant rounding differences. The important thing here, as noted above, is that you understand the concepts enough to get close enough to the correct answer. You’ll find that exam calculation questions will almost always use “closest or nearest to” language, and assuming you performed the calculation properly the correct answer should be clear even with rounding differences.
That said, I tend to take all of my calculations out 5 decimal places.
I go for the full 9 baby!!! ooooh yeah…