Tricky CFAI terms thread

I missed a question last year simply because I didn’t recognize a term. Let’s start a thread that highlights alternate terms in the CFAI text so they don’t surprise us exam day. I’ll go first: human capital = implied assets supperannuation = longevity risk

variance-covariance method for VAR calculation = delta normal method

Love the idea of this thread. I’m pretty sure they always throw at least one in there to try and trip us up. I know I have more than this, but for now: belief perseverence = anchoring also to add to LGF’s post = variance co-variance also goes by analytical method

Good topic. I don’t have much to offer off the top of my head but do need to get on this in the final weeks before the exam. Will add more later. Anchoring & Adjustment being synonymous with conservatism.


bayesian rigidity = rigid views.

Key rate duration is also known as multifunctional duration.

Herstatt risk = Settlement Risk Jensen’s Alpha: Portfolio Return - Expected Portfolio Return based on SML

steph96 Wrote: ------------------------------------------------------- > Key rate duration is also known as multifunctional > duration. Good one. Just to note, it’s one of the 4 immunization alternatives… 1. Multi-functional duration 2. Multiple liability immunization 3. Allow for increased risk 4. Contingent immunization

From Equity SS: Semiactive strategies = enhanced index = risk controlled active strategies

•prospect theory - contends that people value gains and losses differently. •cognitive dissonance - An emotional state set up when two simultaneously held attitudes or cognitions are inconsistent or when there is a conflict between belief and overt behaviour. The resolution of the conflict is assumed to serve as a basis for attitude change, in that belief patterns are generally modified so as to be consistent with behaviour." •Heuristics: People often make decisions based on approximate rules of thumb, not strict logic. •Framing: The collection of anecdotes and stereotypes that make up the mental emotional filters individuals rely on to understand and respond to events

Low coupon issues exhibit less -ve convexity than high coupon issues.

just wanted to say GREAT thread idea. will contribute if i can think of something. keep em coming

In CFA Book 5, their nomenclature for swaptions is FS(2,5) …which means a fixed-payer swaption expiring in 2 years, where have option to enter a swap for a 3-yr duration. I can see the Institute putting this term in a question .

Macro Attribution- Beta Micro Attribution- Alpha