For level-2 would you suggest going literally by the LOS- So if a reading has 10 formulas (for eg. Active Portfolio Management), but LOS for these reading never mention the word ‘Calculate/Estimate’ its mostly “Explain/Describe” etc…, is it reasonable to assume that formula in this reading should not be the focus on the exam.
Pls share your experience!
Thanks as always
That’s how I’d interpret those LOSs. If you can explain/describe how they work (e.g., the influences, sensitivities, assumptions, shortcomings, and so on), that sounds sufficient.
Personally, I’d probably learn the formulae, but that’s just me: I like learning formulae.
I actually had a fun time deriving the active PM equations. You only need to memorize two things: (i) the utility function (VA) and (ii) budget constraint (IR).
Something that I actually understand and not straight memorize like fixed income…