READING 15: Managing Institutional Investor Portfolios - Endowment (Help...
Information given in the School Endowment example:1. Annual operating budget of approx. $10m (90% goes to salaries and benefits for teachers and a small admin staff.2. The school has no debt3. The...
View Article2010 Level III AM Exam
I've been going through the previous years' exams and I've got a couple of questions about the guideline answers on the 2010 AM exam.Q1 A(i) asks what are the liquidity constraints in Elisa Lima's...
View ArticleCFAI Practice Exam
For level 1 and 2, there was one full-length practice exam on the CFAI web site that you could print out and take for free. I know there are three past morning sections you can print out, but is there...
View ArticleSwaps - Is there a LOS on Structured notes?
Two working examples in Reading 31 in CFAI text on leveraged floater and inverse floater. I cannot find the LOS on this. Any idea?
View Article2012 CFAI exam AM - Q7E (Dynamic hedging vs options hedging for interest rate...
@vincentt @ravivooda @Sophie Given: A portfolio of government bonds and MBS securities with the same duration. PM forecast interest rate volatility will rise significantly and yield curve will shift...
View ArticleThe 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...
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. Thanks!...
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 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...
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...
View Article2007 Paper AM - Q.2 Ingrams IRR calc for nom return
Hi there, Cant understand IRR calc for nominal req rate of return. Arent PV (the current portfolio) 4m, and payments both negative inputs, as PV always negative ?? and withdrawals / pmt 205,000 going...
View ArticleBehav Finance - confused with Difference bw Anchoring and Adjustment and...
Hi, Difference bw Anchoring and Adjustment and Conservatism Anchoring and Adjustment - is sticking to original forecast - gtg attached to it. O/wtg old info and U/wtg new info and its an Information...
View ArticleOrder of answering Questions
@Sophie @vincentt @Alta12 @Marc @christine While we are answering sub questions under a question, should we answer in the same order? Suppose under question-1, we are given 5 blank pages and it...
View ArticleClik here to view.
What does number of member firms means?
@alta12 @RaviVooda I'm aware that the higher the number of member firms the better it is, however I thought the firm was referring to the number of companies in the equity market, but it doesn't seem...
View ArticlePaper 2007 AM - Q6 Part B - Risk tolerance of Life Insurance co.
Hi, Paper 2007 AM - Q6 Part B Dont understand why the liquidity need for a life insurer increases with a larger share of fixed-rate annuities in the product line, thus lowering risk-taking ability. Is...
View ArticleSchweser-Vol2-Test-2-Question-7
https://www.dropbox.com/s/85vtnmvp94n69k0/Screenshot%202014-05-24%2022.28.38.png Doubts related to liquidity and risk tolerance 1. Liquidity doubt: Since in the question they are saying that very less...
View ArticleSchweser-Vol-2-Paper-2-Question-6
@alta12 @vincentt https://www.dropbox.com/s/qpla41p0t33ljwe/Screenshot%202014-05-24%2022.24.25.png For the solution to the problem where he is asking for utility, I think schweser has the formula...
View ArticleSchweser-Vol2-Test2-Question-8
https://www.dropbox.com/s/7eoluo8et9ye7j1/Q8.png @alta12, @vincentt Can we annualize composite performance and benchmark performance in result presentation [Given in Notes:3]. Is it not violation?
View Article[Schweser] Exam 1 Morning Q7 Aii
Summary of the vignette: Rine Ruby has core capital of £1,000,000 and excess capital to be £4,000,000. He would like to provide each of his children a relatively equal share of his accumulated wealth....
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