Call Delta at-the-money?
CFAI Book R.28[Option Strategies] EOC Question 7-12 Exhibit 1 show a table regarding call/put optionsand ask when the call option has the largest gamma trough Q.12.I understand that current stock price...
View ArticleTreynor Ratio Interpretation
Treynor measure is the portfolio premium over the risk-free rate divided by beta. A ‘good’ Treynor ratio is one that is larger than the slope of ex post SML.EDIT: In other words, Treynor has to be...
View ArticleSwap duration
Wondering if this sounds right since principal is never echanged in a swap, only payments. From schweser: “To calculate the duraiton of a swap, add the duration of the instrument that replicates what...
View ArticleOpen-ended Capital allocation line question
So in the real world… most firms use an efficient frontier.In the AA section, and in all levels, we learn about adding a risk-free asset, which will create a Capital Allocation Line, between the...
View ArticlePrimary Market - Volume of Issue and spreads
Hi, can someone explain why spreads increase when the primary market has relatively high issuances? The text seems to always say that in Reading 22, but it’s counter intuitive to me.The way I would...
View ArticleReading 6 p. 143 and p. 148
Hi everyone,1) I experience problem with understanding the trade-off example on p.143 of Schweser notes. Especially, my concern is point 6W 4L on the curve - what happens with two extra hours the...
View ArticleElectronic crossing networks vs electronic comm. networks
Please explain the difference….
View ArticleRate my Lvl 3 study plan
Hey all, I’ve never posted here, but I’ve been lurking for a bit. Here’s my comprehensive study plan, let me know what you think. Phase 1: Initial Absorption of Material - Jan 1 through March 1, 2015:...
View ArticleA rule for calculating breakeven of option strategy
With option strategies, calculating the maximum profit price level (look at where short call/short put = 0) and maximum loss price level (look at where long call/long put = 0) are straightforward. But...
View ArticleGap between 3rd party-notes and Curriculum
Hi everyoneBefore posting this note, im not sure if this question is relevant, but I believe it would be very helpful for all who study the third party notes. Therefore, I would suggest if any one who...
View ArticleEstate Planning Appendices
Hi everyoneis anyone giving a serious look into the supplement?I noticed some references in the text but these can be largely ignored IMO.Just wanna make sure I am not missing some substance.
View ArticleConfirmation Bias
As an example of confirmation bias during a rising market, investors will be more likely to: AAdd to their positions during market pullbacks.BReview their investment statements more frequently.CSell...
View ArticleReading 18 EOC 1-C
I don’t get why, in the solution, they say that the band of asset weights within which the proposed TAA would operate is too wide in relation to the permissible range for international equities (which...
View ArticleReading 8 BF and Investment Process: EOC 1 Why is this guy a PP?
Question 1 of the EOC on Reading 8 (Behavioral Finance and Investment Process). Why is this guy a Passive Preserver? Why not Friendly folllower? Here is the definition taken straight from the CFA...
View ArticleAnnualized return to be used in Sortino
Reading 25, practice problem 12B asks for the Sortino ratio for the hedge fund: Sortino = (Annualized return - minimum acceptable) / downside deviation Sortino = (7.36 - 5) / 5.6 I understand how to...
View Article** WARNING: You've Been Cursed... **
OK, I’ll be first to admit that starting this thread is a bit juvenile, but I’m gonna to post it anyways…Come June, most of you will be entering the exam halls to sit for Level III in hopes that this...
View ArticleEOC - Asset Allocation
Paula Williams is the chair of the investment committee of a RFM’s pension plan. The committee has established the strategic allocation and you are given a table of target allocation against...
View Articlemisfit active risk
Hello,How to understand “generate a level of true active return for misfit active risk”, it seems to me they are at two different categories, how to generate true active return from misfit active...
View Articlemutually exclusive projects
Lima inc. can choose between two mutually exclusive projects, both costing 2,700,000, and both having a one-year life. Assume that all agents are risk neutral, and that the risk-free rate is 3%. The...
View ArticleThis REALLY should be easy - real rate vs nominal rate
Really though I would understand this by level III but I seem to find CONSTANT contradictory information.Nominal Rate = 8%Inflation = 3%Then real rate = 5%i.e. the nominal rate includes/reflects...
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