Opinions on Derivatives

I’m averaging 56% through 70 QBank questions on Derivatives. The fact of the matters is that I just don’t know the formulas. I can’t justify wasting what I perceive to be a great amount of time committing this stuff to memory at the expense of not mastering the FSA and Equity sections. Does anyone actually know this stuff well? What will CFAI throw at us? Continuously compounded currency forward valuation xx days into the contract? Valuing an interest-rate call option? Or simple stuff like what is a CDS used for, when is gamma the highest, what is backwardation, calculating an easy forward price on a stock with a dividend payment? Any comments from those who have taken L2 before? I haven’t done any of the CFAI samples/mocks yet, so I’m not aware of what to expect, yet.

Questions will probably be easy. Calculate the delta for instance, value of a forward contract after x days, etc. This is the only area I can’t fail on. Wish we had more derivatives, less FSA.

If I get swaps calculations, I am stumped. I only understands concepts. There is an equity swap in mock and I can’t comprehend even after looking at the answer.

send me an email … cpkrish@yahoo.com

CP - if you are going to share the secrets of derivatives, share it with the whole board! :wink:

I have read the CFA books, Schweser, and Stalla on Derivatives… the Stalla method is way easier to remember… the other two are really confusing… i’m referring specifically to the FRA calculations.

programmer, Can you post a summary of this method? FRA’s are a pain, and any tips or tricks would be appreciated by all, I’m sure!

CP mail me too. mwala@pcmalawi.org

I am not mailing anything to anyone.

A lot of the formulas are similar, so I’m hoping to just memorize the formulas and hope that their application will be clear. …easier said than done, however.