somewhat based on what we saw at L2 last year, here is some conjecture plus potentially curve balls: 1. would be surprised to see focus on futures at all, plus was on exam last year at L2 and L3 levels 2. options—this seems like relatively untested waters lately? know put/call parity—CFAI loves the theory. think fixed income immunization and options might be big—since last year we were tested on key rate duration and MBS only 3. free cash flow—yes, this is a tiny part of the L3 curriculumn, wasn’t tested last year, and i would lay odds there will be a question on it. doesn’t CFAI almost always seem to pull a question out of their hat from the year before? or could be modified Gordon growth model (adjusting for share repurchases and delta P/E) 4. currency stuff—i expect a heavy does and having my own Currency Saturday tomorrow. wasn’t a lot of stuff at L2 exam on this (other than in eco vignette). know covered arbitrage well. so scattered throughout L3 material, seems to me it will be a big part 5. swaps- bet we see this in the morning to hedge exposure. CFAI just has a thing for swaps. make a diagram when you see a swaps question and it makes things a lot simpler 6. IPS- why do i think one of them will have to deal with client losing 50% of his portfolio for a reallocation? 7. time series regression- also not tested last year, and they can pull it in for a quesiton in capital markets expectations very easily (ie. recognize that they are using a time series analysis) 8. minimum variance frontiers—CFAI loves talk about the theoretical. corner portfolio theory has to be on this exam as well as when maanger is allowed to short. 9. one question’s answer always seems to be the risk free rate. maybe return objection for market neutral funds this time around. what do you guys think?
for the IPS idea, the test was already written well before the market tanked last year.
much of the stuff you speculate on is minor level 3 (as u mention) and then a smaller portion of it is non-level 2… maybe it’s how we each define it, but i’d say zero chance we get time series analysis on level 3