SS16 R44 CFAI questions!?!

Hey, Have any of you done (attempted) the CFAI questions for reading 44? They are an absolute b*tch! I was working away through the previous reading’s questions and these just stopped me in my tracks on Saturday. I hope we’re not expected to answer questions like that on the exam. Anyway, I can’t figure out where they’re getting the answer to question 15 (A), in the answer they give a figure of .64% for the yield of the Japanese bonds and I can’t see what figures give that answer. I know this question is rather redundant if you don’t have the book open in front of you but I can’t bring myself to type the whole question into here, the question itself literally spans 4 full pages of the CFAI notes and the answer spans 2 1/2 more! Anyway if anyone can shed some light on this it would be greatly appreciated.

isn’t 15 the last question? That one is a really long one. Infact the 44 & 45 were both kind of hard for me. I just skipped it for now…planning to come back later :slight_smile:

yea it’s the last one, 45 is easy, just did it there over my lunch break. Let me know when you get back to 44

i actually didnt get the whole yield stuff on question 15. If some one can shed a light on how did they get yield numbers that would be great

The yield was the difference between the two yields (say Month 1 and Month 2) times the Notional of $3M. Then take that over the beginning Market Value I believe. Dno’t have my book on me…sorry.

aha i see, i will try that. Thanks willy

BugEyedEarl Wrote: ------------------------------------------------------- > Anyway, I can’t figure out where they’re getting > the answer to question 15 (A), in the answer they > give a figure of .64% for the yield of the > Japanese bonds and I can’t see what figures give > that answer. the interest earned for the month, int = (1.04% - 0.52%) (2,000,000) + (4.16% - 3.47%) (3,000,000) = 31,100 BV = (91%)(2,000,000) + (98.5%)(3,000,000) + (0.52%)(2,000,000) + (3.47%)(3,000,000) = 4,889,500 int / BV = 0.64% (note: don’t forget to add accrued interest to bond price)

thanks rand0m, that is the yield in JPY, right?

yes … it is. actually, part B of this question is even harder. it’s not easy to tie out all the cfai’s numbers

I just started doing them. I found them difficult. I was wondering though…I did not see all those formulas for attribution in schwesers anywhere. In the solutions, the approach is more like common sense then what s’s teaching… Any comment/opinions ?

CFAI has formulas

They are different. In the solution there are no formulas used !!

they have over 13 formulas in the chapter :slight_smile:

is this a previous exam Q ?

Hello, I guess I have some kind of an issue here. When I try the way Random shows, it works for Part A, but not anymore for Part B since CFAI posted a correction (capital gain of 1.55 instead of 1.51 for instance). capital gain : (92%-90%) x 2m + (98% - 96.9%) x 3m = 73,000 BV = (90% x 2m) + (96.9% x 3m) + (1.04% x 2m) + (4.16% x 3m) = 4,852,600 or, BV (according to someone I asked) = (90% + 2m) + (96.9% x 3m) = 4,707,000 capital gain 1 : 73,000 / 4,852,600 = 1.51 or, capital gain 2 : 73,000 / 4,707,000 = 1.55 Oh, and I have no idea how to get the yield gain for February (Part B) since the yield for EIB actually decreased (which would give a negative yield gain while they find it to be 0.67). Anyway, it seems that they prefer the first way of doing it for Part A and the second way for Part B. Or that I don’t understand anything and need your help. I guess it is. Thanks in advance…

Hi everyone, After putting this problem away for a while, I still can’t figure out the capital gain or yield for the Japanese bonds in part B of Question 15. Did anyone solve it? I get the original answer of 0.54 for the yield component, but the errata say the answer should 0.67. I also get the original answer for the capital gain (1.51). Can anyone please shed some light on this? Thanks!

Hi everyone, I think the crux of the issuse is whether the dividend ended to the BV at the denominator refers to the dividend accrued during the period or the cumulative value of dividend since coupon date. Can anyone help? Anyone gets 0.67% for yield gain?

^I recall seeing an Errata with 0.67% in it, check their website.

I am still strugling in Part A, Japan Bond’s capital gain. My calculation is (Vt/ St)/ (V0/S0) - 1= (21837/ .0045)/ (20976/.00429) -1 = -0.75%, the answer is -1.39%. Can somebody help?