smokin’hot (great name) started a terrific thread about a month back on confusing CFA terms, i.e. ones that seem to appear on test day. Following the spirit of cpierce and others, I just uploaded the thread to a PDF: http://www.scribd.com/doc/32174409 It’s short, but maybe as folks read they can suggest additions/revisions? (Also I hope I didn’t screw up using this scribd program… let me know if formatting off)
Let’s add more to this thread- Multifunctional duration is key rate duration
Herstatt risk = settlement risk
Wow, this is awesome. and I absolutely hate “tricky” terms - we flippin’ study this stuff for months on end (sometimes more than that) and CFAI wants to use “non-traditional” words to flip with us. I remember one year they used intergenerational neutrality as a substitute for minimization of taxes between generations. What is going to get me this year is MOST LIKELY and LEAST LIKELY. I just know it. I’m going to get screwed hard on that.
CPierce Wrote: ------------------------------------------------------- > Wow, this is awesome. > > and I absolutely hate “tricky” terms - we flippin’ > study this stuff for months on end (sometimes more > than that) and CFAI wants to use “non-traditional” > words to flip with us. I remember one year they > used intergenerational neutrality as a substitute > for minimization of taxes between generations. > > What is going to get me this year is MOST LIKELY > and LEAST LIKELY. > > I just know it. I’m going to get screwed hard on > that. I love when they throw triple negatives in the mix. So intuitive for those of us that actually speak English.
Correlation Breakdown - describes the rapid increase in correlation during times of crises…specifically when you need the benefits of diversification. Remember, this correlation is not truly due to co-movement correlation, but one of increased volatility.
sorry, just logging on now… spent some extra time w/wife & baby this a.m., hadn’t seen them for a week. anybody fluent in the editing function of this scribd program? trying to update this file. I’m at a Panera Bread in NJ, so maybe their wifi just sucks.
I just realized that this is probably one of the most important threads to follow on this forum: Samuelson effect: In regards to convenience yield, term structure of forward price volatility declines with time to expiration of futures. Kinda makes sense. This is caused by the expectation, although at shorter horizons mismatched supply and demand forces for the underlying commodity increase the volatility of cash prices, these forces will fall into equilibrium at longer horizons.
Hi - I just re-uploaded this doc with the changes: http://www.scribd.com/doc/32255120 Added one I came across last night, in the CFA Sample… Contingent Claim Risk = Call Risk p.s. Was the Samuelson effect in the readings? Apologize if it was… doesn’t ring a bell.
Also, on the CFAI Sample Exams: I love how they worded one question “What’s the MOST LIKELY inappropriate”… with the MOST LIKELY in italics. Designed to screw us.
Neveruse_95%_everagain Wrote: ------------------------------------------------------- > Also, on the CFAI Sample Exams: I love how they > worded one question “What’s the MOST LIKELY > inappropriate”… with the MOST LIKELY in italics. > Designed to screw us. this is going to kill me
Refi of MBS can also be a contingent claim risk - not just calls.
Just revised w/Chi Paul’s comment… also added Cognitive Dissonance = Self-Attribution Bias http://www.scribd.com/doc/32323104