I believe the answer was C. It was regarding a confidence interval around 3.00, I believe. If A contained a lower bound above 3, according to one of the above posters, I don’t see how that would make sense.
3.22 for the upper bound is correct.
That is what I did 2.78-3.22. Answer was C
I got 2.67 +3.33 I thought you get the daily standard, multiply that by th yield and thats your interval. so you have 11% of 3% ~ 0.33 wasnt there a 2.67 ~ 3.33 interval?
I put 3.22 and i think it is 100% correct
You know what, I think it might be 3.67 correct. I think all of us that put 3.22 got tricked. Since we were dealing in interest rates we added two times the standard deviation but what we needed to do is convert the 11% into a bps move so sdev is not 11% but 11% of 3.00% or whatever the base rate was. -1 for me on that. Still think I passed.
-1 for me, used only 1 std.
I had no clue how to do that problem, so I thought “95% is about three standard deviations”, added about three standard deviations to the mean, and got the 3.68% number. Seemed to make sense intuitively to me, although it could be I just fell for a distractor (not to worried about it either way, though).
yeah you did it right Skillionaire. I dont know why I got that wrong, a bit burnt maybe. Who knows, now I’ll only get an 80% on the exam. Not too worried either. Although having to wait until the 18th is going to kill me.
good explanation for A
That was a pure “hmmmm, lemme wing it”, but it did make sense mathematically, I thought. “Who knows, now I’ll only get an 80% on the exam. Not too worried either.” My feelings exactly; I like the swagger.
yorkville Wrote: ------------------------------------------------------- > Chowder > > This is exactly what I did, but I am not sure if > this is right. > > If there are two normal distributions, one with a > mean of 3%, another with a mean of 5%. Each with > the same standard deviation. I feel the confidence > interval should be the same size except shifted. > With the calculations we have here, it seems the > confidence interval’s size is related to the value > of the mean. > > I think Sebrock is correct. The way I read it, the distribution we are looking for is for the CHANGE in yield, not the distribution of the yield itself. This would be a normal with mean zero and daily stddev=.7%. Annualize this and you get 11.29% for the annual stddev of the CHANGE in yield. To get the 95% confidence interval for the CHANGE, take 0+/- 1.96*(11.29%). This gives you an interval for the change between -22.1% and 22.1%. So start with the current yield of 3% and your expect yield is in the interval [.03*(1-.221),.03*(1+.221)]=[2.34%,3.66%]
Wow, you guys knew this one way better than I did. Looking at your answers makes my head hurt. Oh well, I guess there’s more than one way to skin a cat.
sebrock Wrote: ------------------------------------------------------- > You know what, I think it might be 3.67 correct. > > I think all of us that put 3.22 got tricked. Since > we were dealing in interest rates we added two > times the standard deviation but what we needed to > do is convert the 11% into a bps move so sdev is > not 11% but 11% of 3.00% or whatever the base rate > was. > > -1 for me on that. Still think I passed. lemme just table this and close this thread: the range of your confidence interval does not depend on the distribution mean. it only depends on the standard deviation, and the desired confidence level which determines the Z-score. two normal distributions that have different means (say 3% and 15%), will have the same total length of the confidence interval if they have the same standard deviation. it’s gonna be 3% +/- Z*sigma, or 15% +/- Z*sigma. for 95% CI, your Z=1.96
What’s funny is that at the end of the day everyone is talking about and bitching about the same 20 questions that got everyone. I’ll take wrong on some of those but I have to say that the meat of the exam, FSA and Equity valuation I absolutely rocked. I probably did worse than I thought by I think it’s possible that I only got 3-4 wrong on all of those and that is included in the 15 or so I think, or know I got wrong. At the end of the day this thing will be curved and am pretty sure I did not get 36 problems wrong. But I can sit here and pontificate all day and in the end who knows - look for a post on the 18th. I think I gotta stop posting here for a while - nothing to do now but wait.
“lemme just table this and close this thread: the range of your confidence interval does not depend on the distribution mean. it only depends on the standard deviation, and the desired confidence level which determines the Z-score. two normal distributions that have different means (say 3% and 15%), will have the same total length of the confidence interval if they have the same standard deviation. it’s gonna be 3% +/- Z*sigma, or 15% +/- Z*sigma. for 95% CI, your Z=1.96” Wow, that really clears it up for me…um? So, what was the answer? My curiosity’s getting the better of me.
the answer is 3.67. But looks like I got the BS question on the bond future right (M-PV(cf)) so that’s a -1+1 which still leaves me ok. Skillionaire - did you really finish the afternoon at 3:45? Not bad for your 4th time taking the test.
Yes, I really did, and really bought two eight balls from my dealer and purchased a new bong from my head shop before the majority of people were done taking the test (I was quite pleased at that thought). And it’s my first time taking Level II, although I was registered to take it last year.
no, the answer is 3.22% 3%+0.07/1000*Sqrt(260)*1.96 case closed.
I hope your right because that is what I did but if 1 standard deviation is 11% then wouldn’t that be 11% of 3.00% or 33bps so 33bps * 1.96 = approx 3.67, no? Unless the .07% vol was quoted natively, like saying the daily volatility for this stock is $.45 and if that is the case, then we did it right and it is indeed 3.22%.