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Hi David, 1. Could you please elaborate a little bit on the 'Haircut' concept? It would be helpful for me to understand e calculations on the worksheet 7.d.4. (page 22) 2. Also I have another basic question on the K multiplier equation (page 17 in 7.d) K = LGD...

Hi David, Thanks a lot. Yes its some heavy workout for me. I will try to digest it slowly. In the NeededEquity worksheet of 7.b.1 cell # 14 you use confidence level / z value of 1.83. LN (Firm Value) ( Cell#14) = =H13*H12*SQRT(H11)+LN(H9)-H10*H11+0.5*H12^2*H11) Could you please...

Hi David, Could you please let me know what formula did you use to solve for equity needed. I was trying to understand cell # 14. Especially, I donot find a formula where we use the confidence level / critical z value ** Hopefully it will be helpful if we have the actual formulae on...

Hi David, Thanks for your reply. The example you posted has different (for me complicated ) balance sheet. What I thought was if 37.5 is funded by the loan portfolio then the bank will be able to loan only 462.5 and earn 10 % on that amount. Also I noted that the bank is paying...

Hi David, Rather than adding a thread I will add my question in this thread. Hope it is okay and it works. 1. Will GARP explicitly indicate us in the FRM exam that the Economic Capital is not used from the loan portfolio? Else as you say, there is a chance of confusion. In the example...

Hi David, I find it easier to explain the relationship between price of Debt ‘D’ and spread & between time 'T' and spread using the original formula mentioned on page 7 of presentation 6. f rather than the solved formula for spread on page 9:(Credit Spread = 1/T-t ln (D/F) – r) Formula on...

Hi David, Isn't it easy to use the exponential function than LN unless I did not understand whay you specifically used LN function. 80e^-0.05*1 first calculate the expont: -.05 * 1 = -.05 keep the answer and press second e^x function key, thus you get the discount factor 0.951229...

Hi David, In the spread sheet 6.d.1, last section calcuating PD with Stulz formula you have calculated the the numerator value using Debt Value / Firm value ( cell E63/E62). As per formula it is Firm Value / Debt value. However when I calculate using Firm value / Debt Value I get the...

David, Is it safe to say that we could use the calculator ( input: N, PV, PMT and FV) to find out I/YR descrete returns: Most of Fixed Income problems While to calculate continuous returns we use the exponentioan formula.: Most of Derviatives /Options problems. Thanks.

As I watched Webinar #1 to review my math skills, I completed the log return problem differently than David did. I wanted to share this way because after all, we all do things differently and we all learn differently so maybe this will help someone out there. We learned early on in the...