# Things I Chronically Screw Up

intergration, you use Correlationa nd Segregation Correlation is 1 right? And its RP = Std Dev X Correlation X Mkt RP Is that right?? Something like that?

it’s something like that. I want to say you’re right, but don’t trust me on this topic.

(8) Individual ability to take risk – frequently ignore (annual spending)/(port size) ratio. you have to take it easy about this one. CFAI also doesnt really take this too much (i only saw 1 question that does) into consideration, you have to be careful not to classify some one average when they are above average

Intergration RP=correlation X std of mkt X sharpe ratio of world market. Segmenation RP=Std of mkt X Sharpe ratio of world market.

^DAMN!T That’s what I meant… Sharpe Ration not Risk Premium, stupid, stupid, stupid

No biggie, it is only the day after 3-day weekend…I am only on my first cup of coffee.

2nd cup almost complete…where’s my third…oh secretary… I mean Administrative Proefssional…

the way I remember those integration vs. segmentation formula 1) segmentation has correlation of 1 2) RP(i) = beta * RP(m) we know that beta = cov(i,m) / std(m)^2 cov(i,m) = correlation(i,m) * std(i) * std(m) / std(m)^2 now we can substitute cov(i,m) breakdown into beta formula, and put beta breakdown into (2) beta = correlation(i,m) * std(i) * std(m) / std(m)^2 after simplifying beta = correlation(i,m) *std(i) / std(m) and RP(i) = [correlation(i,m)*std(i) / std(m)] * RP(m) after rearranging RP(i) = correlation(i,m) * std(i) * RP(m) / std(m)

I get tripped up on the business cycle characteristics. I can never keep straight what is supposed to be happening in each one.

-currency: whether to be hedged/unhedged on investments -efficient frontier with CML, CAL, resampled efficient frontier…with corner portfolios… these are just very tough for me…

CML = uses Beta CAL = uses Std Deviation Right?

Is CML the same as SML? Just wanted to be clear…thanks

^No. CML is the line with teh Global Portfolio lies on I believe. SML line is more security specific vs Portfolio specific. If a Security lies Above the SML its Overvalued and if its below the SML is Undervalued…or it might be reversed But they are similar in that they both use Beta.

I consistently mess up the immunization calcs even though I have gone through it like 5 plus times, i.e. if immunization rate goes up to 15 what happens to your safety margin and should you immunize immediately?

bigwilly Wrote: ------------------------------------------------------- > ^No. CML is the line with teh Global Portfolio > lies on I believe. SML line is more security > specific vs Portfolio specific. If a Security > lies Above the SML its Overvalued and if its below > the SML is Undervalued…or it might be reversed > > > But they are similar in that they both use Beta. Got it. Thx

I don’t do as well on ethics as I should. In looking at some questions that I’ve missed in the practice exams, it seems I have a tendency to judge “violation” when it’s actually “non-violation.” So on test day, in any close call, I’ll lean toward “non-violation”.

representativeness.

I thought I read through the Emerging Finance reading from CFAI text last week, but I did not find these formuals … What am I missing ? Can someone please quote the page reference in the CFAI text ? Help please… I am sounding stupid… but I rather ask now than later… Thanks!! ws Wrote: ------------------------------------------------------- > Intergration > RP=correlation X std of mkt X sharpe ratio of > world market. > > Segmenation > RP=Std of mkt X Sharpe ratio of world market.

bigwilly Wrote: ------------------------------------------------------- > CML = uses Beta > CAL = uses Std Deviation > > Right? bigwilly, CAL, CML = uses Std SML = uses Beta