if my wife has a discretionary account in my bank, and does not pay any fee, something is wrong… not sure about the right answer to this, but sounds wrong
emarkhans Wrote: ------------------------------------------------------- >> > If she’s a discretionary account and gets IPOs to > begin with, I don’t see how you can ethically > treat her worse. because it’s self dealing.
catenin Wrote: ------------------------------------------------------- > I think the key word in the exam is that this is a > deliverable repo. Since you have to deliver the > collateral, the borrow’s quality doesn’t matter > anymore. Then why do banks care whether or not a borrower can pay his mortgage? If the house is worth more than the mortgage, they can just take the collateral. The idea that borrower quality isn’t relevant to the rate a borrower gets just because a loan is collateralized is preposterous.
wife’s account is ALWAYS beneficial - at least in US. if you get divorced you get part of her accounts, or rather could make a case for it.
actuaryalfred Wrote: ------------------------------------------------------- > because the payments are distributed through the > whole maturity, so the shape of the yield curve > will affect it more > 100% sure it was said in CFA book, just not sure > where I know that was the CFAI says, but that was not one of the choices. The choices where: Longer duration. Call options credit quality
credit quality of the borrower is not an important factor as a repo is a secured loan
Ozzy05 Wrote: ------------------------------------------------------- > credit quality of the borrower is not an important > factor as a repo is a secured loan agreed
bchadwick Wrote: ------------------------------------------------------- > comp_sci_kid Wrote: > -------------------------------------------------- > ----- > > CFAAtlanta Wrote: > > > -------------------------------------------------- > > > ----- > > > not core satellite. > > > > > > portable alpha. He didn’t want to overpay for > > > manager who delivers passive returns. > > > > > > he couldnt go alpha as he was restricted to > hold > > only, so it is core satellite > > Can’t do derivatives. > Can’t go short. > It’s benchmarked to S&P100, all large cap, so no > real alpha likely to be available. > Maybe you just gotta overweight or underweight > your equities by yourself. That’s what I was thinking… ugh, I don’t think this test went well for me.
9,975,000, got the same answer. Don’t remember the question.
What did everyone get for the holdings and return based it boiled down to returns are based on past info and returns summarizes entire portfolio and holdings summarizes individual securites? I went with returns based relies on past info since the major disadvantage of returns based is it detects style drift slower as it is based on past returns while holdings looks at your portfolio right now.
I went with individual securities vs. entire portfolio
s23dino Wrote: ------------------------------------------------------- > What did everyone get for the holdings and return > based it boiled down to returns are based on past > info and returns summarizes entire portfolio and > holdings summarizes individual securites? I went > with returns based relies on past info since the > major disadvantage of returns based is it detects > style drift slower as it is based on past returns > while holdings looks at your portfolio right now. Correct. Did you think the style was OK ? that’s what I picked. Portfolio was actively managed with more than 80% in mid-cap growth/core.
elcaro Wrote: ------------------------------------------------------- > Ozzy05 Wrote: > -------------------------------------------------- > ----- > > credit quality of the borrower is not an > important > > factor as a repo is a secured loan > > agreed it is absurd to suggest that credit quality of borrower is irrelevant in any kind of lending situation, especially when the collateral they put up is not risk free. Of course this may not be the answer that CFAI is looking for. All I kept thinking about was Bear Stearns and how their repo line got pulled, surely, the credit quality of the borrower had a lot to do with that.
Nobody is saying that it’s irrelevant. They were asking for the least important of the 4 choices, and the others all seemed more important.
needhelp Wrote: ------------------------------------------------------- > mo34 Wrote: > -------------------------------------------------- > ----- > > thetank Wrote: > > > -------------------------------------------------- > > > ----- > > > emarkhans Wrote: > > > > > > -------------------------------------------------- > > > > > > ----- > > > > sandy_capone Wrote: > > > > > > > > > > -------------------------------------------------- > > > > > > > > > > ----- > > > > > borrower quality is the right choice. > > > > > > > > > > Risk free rate is not correct because it > > > > > correlates with prevailing interest rates > > (or > > > > > federal funds rate) which is explicitly > > > listed > > > > as > > > > > one of the factors on which it depends. I > > had > > > > all > > > > > the factors in my notes and felt like an > > > idiot > > > > for > > > > > spending so much time on trying to > remember > > > > these. > > > > > > > > I disagree that the repo rate closely > > > corresponds > > > > with interest rates as a whole in the > > economy, > > > > which is what the choice was. > > > > > > > > I also disagree that Bear Stearns the day > > > before > > > > it blew up could have got repo money at the > > > same > > > > rate as Goldman, even for the same > > collateral. > > > > > > > > However, you will have the right answer and > I > > > will > > > > have the wrong. > > > > > > I agree, if anything, quality of borrower > > should > > > be the MOST important > > > > Quality of the borrow should make a difference, > > but not in CFAI land. It doesn’t, 100% sure of > > that one. > > most people are not thinking deeper. > > i go to government and say please lend me $100. > givernment says sure we can but you will have to > put up your house as collateral. i say sure. i > sign docs. > > now in truth i have a credit score of 320 and i am > a liar and a thief and i plan to never return the > $100. but the govt doesnt care anymore cuz i > handed over my house as collateral. > > borrower quality is of no importance whatsoever. i think the quality is important. Not all companies have to post collateral necessarily I thought? And the option that said “interest rates prevailing in the economy” seems too general…there are 1000 interest rates for different markets and securities. This was a tricky one
mo34 Wrote: ------------------------------------------------------- > s23dino Wrote: > -------------------------------------------------- > ----- > > What did everyone get for the holdings and > return > > based it boiled down to returns are based on > past > > info and returns summarizes entire portfolio > and > > holdings summarizes individual securites? I > went > > with returns based relies on past info since > the > > major disadvantage of returns based is it > detects > > style drift slower as it is based on past > returns > > while holdings looks at your portfolio right > now. > > > Correct. Did you think the style was OK ? that’s > what I picked. Portfolio was actively managed with > more than 80% in mid-cap growth/core. Yea I said it was ok, but I thought about for awhile.
IamArkad Wrote: ------------------------------------------------------- > 9,975,000, got the same answer. Don’t remember > the question. same
s23dino Wrote: ------------------------------------------------------- > mo34 Wrote: > -------------------------------------------------- > ----- > > s23dino Wrote: > > > -------------------------------------------------- > > > ----- > > > What did everyone get for the holdings and > > return > > > based it boiled down to returns are based on > > past > > > info and returns summarizes entire portfolio > > and > > > holdings summarizes individual securites? I > > went > > > with returns based relies on past info since > > the > > > major disadvantage of returns based is it > > detects > > > style drift slower as it is based on past > > returns > > > while holdings looks at your portfolio right > > now. > > > > > > Correct. Did you think the style was OK ? > that’s > > what I picked. Portfolio was actively managed > with > > more than 80% in mid-cap growth/core. > > Yea I said it was ok, but I thought about for > awhile. concur on this
…
right, i mean any time you enter into a lending agreement one of the first thing you do is a credit analysis on the borrower, everything else depends on that assessment