In general, for an upward-sloping yield curve, the immunization target rate of return will be less than the yield to maturity because of the lower reinvestment return. Conversely, a negative or downward-sloping yield curve will result in an immunization target rate of return greater than the yield to maturity because of the higher reinvestment return.
Source : Reading 20, 4.1.1.2
I cant find the rational. Any explanation is highly appreciated.
I know I have seen this topic before, but can’t seem to find it, as if you type Schweser into the search field, you get all the advertisements for mock exams and what not.
I am finding that the Schweser study materials for level 3 are just strange. The essay portions of their practice exams are not on point at all and feel very different than those from the CFAI previous exams. Even the multiple choice seems a bit off to me as well. I did a bunch of the problems on the CFAI website this morning, then decided to do a Schweser mock multiple choice section from their practice exam book and immediately could see that the way the questions are written and what not, are entirely different.
Does anyone else feel this way as well? (particularly on the multiple choice, I think ive read previous threads on how people hate the Scheweser essay questions). Or is it just me?
Hi everyone,
Can someone please confirm what the AUM fee is based on? Is it based on committed capital? or is it based on NAV? Readings contradicted. Thanks.
Hi everyone,
A bit of confusion here, one of the readings says that the benchmark for an equity market neutral fund should be the 3 month T-bill, another says it is an absolute return strategy = use a hurdle rate.
Can someone please confirm… do you use a hurdle rate other than the 3 month T-bill, or use the T-bill…. or am I just confused, and the hurdle rate should be the 3 month T-bill?
Thanks a lot.
60 days left ……. Is it worth for me to do the prastices exercise in the CFAI books. it is quite time consuming, I would like to know if the exercise similar to exam or not ? THANKS
Gents,
let’s assume that the Griffin’s family has net savings (it means Annual Income > ongoing expenses).
Besides this, and to complicate candidates lives, they plan to build either a fund to pay daughter’s university fees, rather than paying off the left home mortgage or whatever can come up. The message here is however this : the sum of these one-off expenses can definitely be included under the liquidity requirements section OK?
Now : Should we reduce these one-bloody off expenses i.e. the liquidity requirements by the net savings?
According to what I understand it’s a NO
According to what a reasonable person would do it’s a YES.
Your view is naturally very much appreciated.
Best
Yes! It should not be a secret that one of the best ways to prepare for your Level III exam is to practice past year’s essay exams.
I recommend that you do the exams from 2011 to 2015 and if you have more time then go back to years before that.
However you should be careful to only spend time on those questions from past exams which are relevant for 2016.
For the full relevancy table from past exams from 2006 to 2015, email me at info@ift.world.
Does anyone know where I could find the exact topic weightings for Level III? I found the one with the general weightings, but it just says “Portfolio Management 45-55%”. I would like to find a table with more detail.
Thanks.
Dear Friends,
I got this question list from 2015 CFA l3 Result thread at AF. I found that this particular Portfolio management item set has been appearing from last 3 years, But i am not able to find out that which topic this is referring to?
its not been assigned by any topic name - like Asset allocation, Individual, Institutional ….
Can anyone help?
————————–
Economics 18
Equity Investments 18
Ethical & Professional Standards 36
Fixed Income Investments 18
Portfolio Management 18
Portfolio Management - Individual 18
Portfolio Management - Monitor&Rebalance 18
Portfolio Management - Risk Management 36
Best Regards
HariHari
Hi,
I have a from example 12 in institutional reading page 456:
The risk objective as stated:
Although the fund has a 10-year life, it is receiving donations over a period of years and it is also constantly spending money on programs. Thus, it can be assumed to have a five-year investment horizon on average and should initially adopt a conservative or below-average risk profile (a standard deviation of annual returns in the range of 5 percent to 7 percent) Over the life of the fund, the risk objective should gradually migrate to an even more conservative profile (standard deviation of 3 percent to 5 percent). The relatively short time horizon calls for a below-average risk tolerance
I thought it should be other way around. The risk tolerance should be higher because they have to spend the money in 10 years ???
Plese explain
CRAi book section 27 part 2B B
the problem calulates the forwards needed to change the portfolio s/b mix as well as the duration/beta change.
It then asks to compare with real stocks vs the simulated profile.
The first method appears to be giving the anser with the new beta convexicty. the second method appears with the old.
am i missing something? M thoughts are the two shouldnt be comparable.because of the different betas and durations
Is there somewhere in the book or somewhere that tell you what % of cash flow to assets decreases or increases risk tolerance. Sometimes I think i know what’s considered a moderate asset base but i’m wrong.
I know this is most likely because its late and Ive been at it for 5 hours but i find that Qbank at Level III can confuse you at points. The explanation for answers are sometimes unclear. I dunno, It could just be me
2014 mock says “Agricultural commodities typically provide an expected offset to losses in such assets as conventional debt instruments in times of unexpected inflation”
Does that mean agricultural commodities can hedge inflation? I thought non-storable commodity cannot hedge inflation.
Can anyone help?
Hi,
i am confused by the item “Equity Portfolio Management - Sonera”
The betas given do not sum to 1 , whereas one can read in the curriculum :
“Returns-based style analysis involves a constraint that the coefficients or betas on the indices are nonnegative and sum to 1. That constraint permits us to interpret a beta as the portfolio’s proportional exposure to the particular style (or asset class) represented by the index”
I am missing something?
Does anyone know when it’s becoming available?
I am still caught between a mechanical pencil or an erasable pen. However, I will definitely not take a normal pencil because I don’t want to end up having to sharpen.
What is not the input of the BL model?
Investor’s capital market expectations.
Investor’s confidence in these capital market expectations.
Long‐term returns of asset classes.
The answer is Long-term returns. I suppose LT returns here mean the returns derived from the model, not the input. But how can “confidence” be an input? I’m perplexed …
Why do value stocks have high dividend yield?
I thought “value” companies need money to reinvest in their businesses, thus, they should pay less dividend or no dividend at all? Or is it because their prices are low, resulting in high div yield?
Can I hold both long and short positions in the same security when using short extension strategy?
I think it’s still ok if I long and short the same security but at different amount.
