Portfolio construction calculation

according to the LOS of Reading 69, we’re only required to know the steps of Treynor-Black model, but the EOS questions are really computationally intensive. Do we need to compute every step till the end on exam day? I’m comfortable with the formula to calculate weighting of individual securities in the active portfolio and information ratio, but i just couldn’t make it till the end. Any thoughts on the requirements? Thanks!!

Once upon a time an exam had a seriously horrific Treynor-Black stem set. It would seem unlikely that they will make you calculate the whole thing again but it could happen like it did in whatever year that happened. The prob. is small but it does exist. Can’t always trust what the LOS said, they reserve the right to screew you without morals.

okay…Let’s just pray for the best, hope i’ll have time to dig into this later

can you reference a problem/page?

At the beginning of the reading there is a note that says: “Candidates are not responsible, within reading 69, for deriving or memorizing the formulas introduced in sections 4-6.” make what you want of this, I’m not memorizing any formulas there.

I must have read that note 15x and wondered what was left if you didn’t have to “derive or memorize” that bad boy. The LOS only says you have to “discuss the steps…” The 3 EOCs didn’t clarify matters either. They just wanted you to calculate everything. Well, now I’m on reading 70, and my calculator is taking a much needed break!

thanks Iginla

If you look at questions 19-22 on page 584-585 of PM book, you’ll get an idea as to what kind of questions might be asked on this TB reading. But my guess is as good as anybody’s.

Dont worry about the formulas, like CFAI says. Do know what TB is and how it is used.