The Ultimate Guide to Tackling IPS Questions - Institutional Investors
Since @lakshya25 's epic question on this a few weeks ago, which I only answered for Individual Investors, I thought I'd follow up with the various RRTTLLU summaries for Institutional Investors, e.g....
View ArticleIPS - inflation rate and required return
@ravivooda @marc @ajfinance @Sophie Both @vincentt and I are trying to ascertain whether foundation/trust and endowment is the only institutional portfolio that requires adding inflation.Please let us...
View Article2011 Level III CFA AM exam - Question 7
@vincentt @ravivooda This entire question looks like corporate finance in level II, in 2013. I don't think it's in Level III LOS for 2014. Could you please let me know your thoughts on this....
View Article2012 CFAI AM paper - Q6A calculating return objective of DB Plan
@vincentt @ravivooda How come we don't need to add inflation to the 5%? How has expected future liabilities already been incorporated expected inflation-related adjustments. Is this always the case for...
View ArticleSwap duration - Schweser 1PM - Q44
@vincentt @ravivooda @Sophie Given: The company enters into a 2 year swap with semi coupon payments to pay floating and receive fix. Question states duration of the fixed side of the swap is 1.2.I...
View ArticleCFAI practice and mock exam site down?
I've been trying fruitlessly to access the practice test and mock exam page of the CFAI website, but I just can't get there. I saw on another forum that other people are having the same problem. Is...
View ArticleSchweser Exam 1 PM - Q26
@vincentt @ravivooda @sophie why is the answer B? Given: Economist believes long term interest rates should fall over the next year, but the short term interest rates should gradually increase. The...
View ArticleSchweser Practice Exam 3 AM - Question 9a
The text:"Wilson wants to enter law school, which should take three years and cost $45,000 the first year, increasing annually by the rate of inflation of 3%.""Wilson is particularly interested in...
View ArticleCFAI 2013 AM - Question 7D
@Alta12 @RaviVooda is this question even in 2014's syllabus?Hagar decides to decrease the equity allocation in the pension plan from 60% of plan assets to 40%, by shifting 20% of the portfolio from...
View ArticleCFAI 2013 AM - Question 9B
Text:Trade 1: Sell a 3-year maturity AAA corporate bond and buy a 30-year maturity AAA bond of the same issuer based on the expectation that credit spreads will tighten uniformly by 10 bps across the...
View ArticleCurrency Move Based on Real Interest Rate Movement
This may be a dumb question but I feel I see a different answer every time so I wanted to ask all of you what do you think. If the interest rate differential moves or is expected to increase, would the...
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Confusion on the Standard Deviation in Domestic Currency
Equation 3 in the image below is actually the formula to calculate standard deviation for a portfolio with 2 assets.Rdc = Asset return in domestic currencyRfc = Asset return in foreign currencyRfx =...
View ArticleCFAI 2013 AM - Question 7D
@Alta12 @RaviVooda is this question even in 2014's syllabus?Hagar decides to decrease the equity allocation in the pension plan from 60% of plan assets to 40%, by shifting 20% of the portfolio from...
View ArticleCFAI 2013 AM - Question 9B
Text:Trade 1: Sell a 3-year maturity AAA corporate bond and buy a 30-year maturity AAA bond of the same issuer based on the expectation that credit spreads will tighten uniformly by 10 bps across the...
View ArticleCurrency Management: standard deviation of DC...want to understand the logic...
@vincentt @RaviVooda Why is weight of RFC and RFX in the formula assumed to be 1? I can memorise this but want to understand the logic behind it.Thanks!
View ArticleCFAI 2013 PM Question 50
@alta12 @RaviVooda For the 9th Itemset question 50, it ask about how to achieve the new target duration, in exhibits 2 there's info on CTD and also future contracts, how do we know when to use CTD or...
View ArticleSchweser Exam 2PM Q33 - Explanation
@vincentt @RaviVooda Given portfolio effective duration = 5.42 and spread duration = 6.25.Schweser stated that for 50bps change in the zero volatility spread should lead to 6.25 / 2 = 3.125% change in...
View ArticleCFAI 2013 AM Q3a - Behavioral utility
Can someone explain why Friedman-Savage utility function and Prospect theory seem to contradict each other? Pg 18, Vol 2, Prospect Theory says concave for gains (implying risk aversion), convex for...
View ArticleImmunisation and YTM
@vincentt @RaviVooda I don't understand the following in relation to immunisation. Please help...- For an upward sloping yield curve, immunisation target rate of return < YTM because of the lower...
View ArticleDifference bw Multiple Liab Immun and Cash Flow Imm - confused
Hello, In Multiple Liab immunization - each existing portfolio cash flow stream is set off against the maturing liabilities to be paid and in cash flow immun. you buy a bond that matches the last...
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