i thought this was a gimme - interesting to see principal trade being so popular. the dealer will extract a price cut for his return, with 6 months to play, why give anyone anything.
After reading the definition of principal trade in the CFAI text, I am pretty sure it is not principal trade.
tell me its limit order, i had no idea what the other 2 were
hezagenius Wrote: ------------------------------------------------------- > After reading the definition of principal trade in > the CFAI text, I am pretty sure it is not > principal trade. and why is that ?
mo34 Wrote: ------------------------------------------------------- > hezagenius Wrote: > -------------------------------------------------- > ----- > > After reading the definition of principal trade > in > > the CFAI text, I am pretty sure it is not > > principal trade. > > > and why is that ? a trade with a broker in which the broker commits capital to facilitate the prompt execution of the trader’s order to buy or sell
I don’t have the books around anymore, but if you look at the end-of-chapter problems, you will find a problem where they ask you to identify the best way to execute a trade, look at the last one ( done with a principal trade), check out their reasons in the solutions, they all apply in this case. Essentially the bottom line is if the trade is so large ( like in this case), use someone to shop it around for you. I did not remember reading that they had 6 month to execute the trade, but if it’s the case, then I am not sure what the solution would be. I don’t like ECN because of the high probability of having the trade unfilled, if most of the company is owned by institutions ( Long term investors, not traders), you’ll have a hard time filling the trade on an ECN.
which asset class uses IRR??? Private equity right??!!!
it was a rebalancing situation where they had 6 months to finish rebalancing or something like that. definitely not principal trade.
Love your Overconfidence. We’ll find out in September when they post the answers.
Two facts: Definitely 6 months to execute Large Institutional ownership which swayed me to ECN because you you can always switch down the road asthe drop dead date looms.
Per GPS, most appropriate asset class to use IRR is private equity, SI-IRR (since-inception internal rate of return) itstoohot Wrote: ------------------------------------------------------- > which asset class uses IRR??? > > Private equity right!!!
if the liabilities 5-7 year the best portfolio is 2-10 year bonds or portfolio A??
There’s a possibility that the graders can’t agree on a solution and accept principal or ECN…
itstoohot Wrote: ------------------------------------------------------- > if the liabilities 5-7 year the best portfolio is > 2-10 year bonds or portfolio A?? assuming i read the question correctly, you would immunize with a portfolio of matching zero coupon bonds.
-1
I had the 5 and 7 year zeroes, can’t think of anything else you’d want to do.
suddenly remember another question, like using a coupon bond with the exact duration as the liability or two bonds with +1 -1 year of maturities and same duration, which one is best according to classical immunization theory
hezagenius Wrote: ------------------------------------------------------- > umuc Wrote: > > However if you actually calculate the quarterly > > returns and divide by 4, then you get the > second > > set of numbers. > > > > Now remember that GIPS post 2006 is monthly > > returns, not yearly. > > > > The question asked “closest” to. > > > > The monthly returns will be closer to the > > quarterly returns, hence the second set of > > numbers. > > J > > > Why would you divide by 4? If you do that, you > are not geometrically linking the quarters. I did > it by quarter and geometrically linked them and > then just did year-end to year-end and got the > same results because there were no CF in or out. > I went with the first set of numbers. If you start a year with $1 and you end it with $1.12, your return for the year is 12% and it doesn’t matter how you get there.
emarkhans Wrote: ------------------------------------------------------- > hezagenius Wrote: > -------------------------------------------------- > ----- > > umuc Wrote: > > > However if you actually calculate the > quarterly > > > returns and divide by 4, then you get the > > second > > > set of numbers. > > > > > > Now remember that GIPS post 2006 is monthly > > > returns, not yearly. > > > > > > The question asked “closest” to. > > > > > > The monthly returns will be closer to the > > > quarterly returns, hence the second set of > > > numbers. > > > J > > > > > > Why would you divide by 4? If you do that, you > > are not geometrically linking the quarters. I > did > > it by quarter and geometrically linked them and > > then just did year-end to year-end and got the > > same results because there were no CF in or out. > > > I went with the first set of numbers. > > If you start a year with $1 and you end it with > $1.12, your return for the year is 12% and it > doesn’t matter how you get there. amen, no need to geometrically link anything, 2 divisions and ur done
answer was A, forget the numbers