Problem #2 from Reading 44 in CFA text - are you f'in kidding?!

That thing was a monster! If something like that shows up on the exam, I am toast. That seriously took me about 30 minutes to slog through. How the heck can you keep straight when to use base currencies or local currencies? Part C was especially brutal. I am still not certain how it was done even after looking at the solution.

Yeah I’m doing those problems on Sunday, hopefully

Did you look at 6-7-8 where they do not give weights and the equation is complex ?

6,7,and 8 were easy…no weights were needed. Oh and #2 is nothing compared to #15 the last one. They are all a b!tch to do.

Are they anything like what we should expect on the exam ?

No way

I did 15 yesterday although I still can’t figure out the yield contribution of 0.64 for Japanese bonds. Anyone know where that number came from?

no answer here…bigwilly, can you plz help? 0.64 for #15 Jap Bond, how to get?

Its been discussed before. It’s the Difference in Accrued Income Yields times their respective Principle Values…that will give you the accrued income for the period. Next take that value and divide it by the Beginning mkt value + accrued interest from prior period. It will come out to 0.64%. I think if you try searching for 0.64 you might find the thread.

Thanks so much, I found the thread.

Better tuck that nugget away for the exam. That is just the kind of thing they like to pull.

I’m trying to do #5 of reading 44. I understand how CFAI did it. I took a slightly different approach and applied the following formula: Return in \$ = (1+LMR)(1+LCR)- 1. where LMR = foreign market return LCR = foreign currency return Techincially, you should be getting the same answers, but I’m not! What the heck is wrong? Someone please help… thanks!

AnalyzeThis: Did you adjust your original principal for the currency change as well? Or are you just applying it to your returns.

Just applying it to the returns. What CFAI did was: they converted beginning and ending foreign values of the portfolios to domestic (USD) using beginning and ending exchange rates and then they calculated the % return. What I did was : I calculated capital gains in the foreign markets and the foreign currency return separately and took a geometric avg of the two to get the \$ return. Where did I go wrong?

I got it! One calculation mistake and the whole problem goes for a toss! Thanks anyway ymmt!

I’m pissed with the way Schweser explanained Global Performance Evaluation. They created their own concepts and simbols that are different from what you see in the CFAI reading.

So did Stalla!

When I read the schweser notes for the first time on this reading and then attempted the CFAI questions, I found out real quick that this is one reading where reading the CFAI text was in order.

Guys, I applied the schweser’s formula and got the same answer. It’s common sense. Either you do it the way CFAI does it or s’s-the answer has to be the same.