Posted by: QuantJock_MBA type 1 and 2 are great thanks
You can say you passed CFA Level X exam if you actually passed the Level X exam. You don’t need to be a candidate to make this reference. To declare you are a CFA candidate, you must have already scheduled to sit for an exam and abide to the C&S. (You don’t need to actually sit in the exam; MIA is fine.) Implicitly, that means you have already paid your fees and filled in the declaration of conduct (or whatever that thing is called).
story about this supermodel in a bar who loves hooking up with dudes who have fu manchus and blue bowling shirts ridiculous = i know . . . haha Six Assumptions of a Normal Multiple Linear Regression Model (ie supermodel in a bar) 1. Relationship between Y (the model/chick) and X 1, X 2, X 3 (the dudes) at the bar is linear. When she takes one shot at the bar, they take one shot. 2. Independent variables (X es) that she (Y) brings home are not random. She always brings home guys with fu manchus and blue bowling shirts. 3. Expected value of error = zero, she is def taking home a fu manchu blue shirt wearing dude 4. Variance of Error Same - I mean she is only human, right (Homo. assumption!) 5. Error term uncorrelated – she picks blue-shirted fu manchu dudes who don’t know each other from all regions of the US. 6. Error term normally distributed – she has hooked up with a bell shaped distribution of fu manchu dudes – from the 100lbs to 300lbs Summary 1. Linear – shot for shot 2. Not Random – only fu manchus and blue bowling shirts 3. Expected value of error = zero, she is def taking home a fu manchu blue shirt – wearing dude 4. Homosapien / skedastity assumption! – she is only human 5. Error is Uncorrelated (fu manchus across the US) 6. Error is normally distributed (she hooks up with all shapes and sizes)
eltia Wrote: ------------------------------------------------------- > Here is a summary of the Treynor Black model > extracted from my notes. You can download it from > the following location: > > ttp://www.sendspace.com/file/oa4stg > ttp://www.megaupload.com/?d=VYRRWKRK > ttp://rapidshare.com/files/234387235/treynor-black > .pdf.rar.html > > It is based on CFAI text practice problem 1 in > reading 69. The password is analystforum. I believe we don’t need to know the formulas. It says in the cfai book on the firts page of ss 69.
Mihaz Wrote: ------------------------------------------------------- > I believe we don’t need to know the formulas. It > says in the cfai book on the firts page of ss 69. You don’t need to memorize the formula. You are still required to know how T-B works. (It’s a subtle difference, but subtle enough to be significant on the exam.)
The two main objectives of corporate governance are to eliminate or reduce conflicts of interest and to use the company’s assets for the benefit of investors and other stakeholders.
SS3 I have a feeling they are going to throw the specific term “parsimonious” into the exam. ie third bullet How to Avoid Common Forms of Model Misspecification - Model should be grounded in cogent economic reasoning - Functional form for variables should be appropriate given their nature - Each variable in regression should play essential role (parsimonious) - Should be examined for violations of regression assumptions before being accepted - Should be tested and found useful out of sample before being accepted
@Quant_Jock_MBA I have some troubles with learing stuff for multinational operations… what do you mean with the bullsh*t thing? Bullsh*t IS your Current Average." All current method BS = current rate, temporal = avg. rate. stupid but works for me. ------------------------------------------------ dO YOU ALSO MEMORIZE ALL THE RATIOS? this I UNDERSTAND: for int’l ops going down the line, from b/s to i/s like the schweser powerpoint temporal = Call Her Hillary Manchester, And Hear Her Mother all current = Can Christie Hear Colin, About Another Anniversary Altogether?
LOS 68.f and 68.g can be confusing to some people. Schweser’s examples aren’t too clear neither. So here is the long story short: LOS 68.f asks you to calculate the *expected* nominal exchange rate and returns (what you anticipate to happen). Whereas LOS 68.g asks you to calculate the ending real exchange rate and ex-poste returns (what already happened). E(Nominal_{1}) = Nominal_{0} x (1 + I_{DC} - I_{FC}), where I’s are inflation. E® = r_{FC} + (I_{DC} - I_{FC}), where r_{FC} is the foreign bond return. Real_{1} = Real_{0} x (1 + Change in Real), where Change in real = Change in Nominal - (I_{DC} - I_{FC}). ex poste R = E® + Change in real = r_{FC} + Change in nominal. (Note: the inflation differential cancels out.)
@elita couldnt find this stuff through the link! ------------------------------------------------------- > Here is a summary of the Treynor Black model > extracted from my notes. You can download it from > the following location: > > ttp://www.sendspace.com/file/oa4stg > ttp://www.megaupload.com/?d=VYRRWKRK > ttp://rapidshare.com/files/234387235/treynor-black > .pdf.rar.html > Any advices how to memorize the whole purchase/pooling PPP and Fisher and so on…?
PPP = Relation between Inflation and Exchange rate expectations Fisher : Interest rate and inflation Purchase : Take it @ fair market value, Since the date of acquisition and all ratios are pretty much worse than pooling. Pooling: Ratios are better, full year entry in B/S
You need to add a ‘h’ in front of the links for them to work. I did not type out the full ‘http’ because the links could get harvested by search engines and spiders. I posted a pictorial approach to memorize those confusing differentials earlier. Idea is that you first draw a full circle with three vertices consisting of three differential (interest rate, forward rate movement, expected exchange rate movement). Going clockwise you would get IRP, FEER and UIRP. Then you add the missing differential (inflation differential) in the middle and connect it to IR to get Fisher and then to expected exchange rate movement to get PPP. Purchase vs pooling. I think the key are to re-read the fine prints (especially the GAAP vs IFRS treatment, like R&D expensing vs amortizing). In general, purchase method gives higher value due to the use of MV. Also pay attention to how you break down the purchase price into cost, excess over purchase price, excess depreciation and goodwill. (Goodwill is basically accountant’s way to say “we don’t know what this is”.)
Payer swap = series of long call / short put Receiver swap = series of short call / long put Long cap = series of long put on FI / call on IR Long floor = series of long call on FI / put on IR Payer swaption = put option on bond Receiver swaption = call option on bond Floating rate payer in IR swap = series of short FRA (both have liability when rates increase above contract rate) Swap with n payments left = strip of n-1 FRAs Effect of IR change: option on FI or long floor - value changes inversely to IR long cap - value changes proportionaltely to IR.
eltia Wrote: ------------------------------------------------------- > E(Nominal_{1}) = Nominal_{0} x (1 + I_{DC} - I_{FC}), where I’s are inflation. Thanks for this post eltia! Just want to confirm - is the above line definitely correct? I dont recall seeing a 1+Idc-Ifc term in any formula. Thanks.
I believe it is correct. It’s based on the example in SchweserNotes. The assumption here is that PPP holds and the rates are expressed in DC/FC. e.g. if foreign country has higher inflation than domestic inflation, we expect the foreign currency to depreciate. Hence nominal rate in next period is expected to adjust down by the inflation differential because we assume PPP holds.
Why can’t we use: {Nominal 0} * (1+Idc)/(1+Ifc) = E(Nominal 1) to find the expected nominal rate ?
Venture capital methods (from PE in AI) in a nutshell. Suppose period i (= 1 or 2) has discount rate r_{i} and lasts n_{i} years. Let R_{i} = (1 + r_{i})^{n_{i}} - 1. The number of shares the investor wants is s_{e} shares and the PE firm wants s_{pe_{i}} shares in period i. PRE1 + INV1 = POST1 == x (1+R_{1}) => FV1 = PRE2 PRE2 + INV2 = POST2 == x (1+R_{2}) => FV2 POST_{i} = FV_{i} / (1 + R_{i}) PRE_{i} = POST_{i} - INV_{i} f_{i} = INV_{i} / POST_{i} Alternate forms: f_{1} = s_{pe1} / (s_{pe_1} + s_{e}) f_{2} = s_{pe2} / (s_{pe_1} + s_{e} + s_{pe_2}) P_{i} = INV_{i} / s_{pe_{i}} Shortcuts: P_{1} = PRE_{1} / s_{e} P_{2} = PRE_{2} / (s_{e} + s_{pe_1})
The equation with (1+I_{DC} - I_{FC}) is a linear approximation of the (1+I_{DC})/(1+I_{FC}). For that particular LOS, Schweser uses the linear approximation.
eltia Wrote: ------------------------------------------------------- > The equation with (1+I_{DC} - I_{FC}) is a linear > approximation of the (1+I_{DC})/(1+I_{FC}). For > that particular LOS, Schweser uses the linear > approximation. Got it, Thx!
Here are a couple tricks I use for 1. to remember currency movements for exporters and imports as well as for net asset or liability exposures i use: american EAGLes Will Fly SouthWest Exporters/Asset exposure Gain/Loss When Foreign currency Strengthens/Weakens & the converse ILL G’s Want Fly Shoes to Wear Importers/Liability exposure Loss/Gain When Foreign currency Strengthens/Weakens 2. for remembering when to use Current vs. Temporal: this is TuFFeR than the CFP Temporal For Functional Reporting; Current For Presentation 3. I dont know if any of you found it important, but i felt they spent way too much time on bid-ask spreads and cross-rates for us not to remember how to calculate cross rate bid-ask spreads. so here is what I use: its Always Better to Choose Bizarre over Conventional Art for Bidding or Buying At Auctions And Boutiques or MJ sang ABC Before Distinctively Changing his Appearance By Buying An Atrocious And Bizarre nose it might be difficult to follow but it flows like this in my mind: A:B = C:B over/Divided by C:A Bid = Bid Ask Ask= Ask Bid I made the the top one first but the second one i find easier to remember. hope this helps