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Monthly payment=(140,000*(.036/12))/(1-(1+.036/12)^(-360))=636.50 O/s balance=(636.50/(.036/12))*(1-(1+.036/12)^(-300))=125,790 which matches none. yeah there is some error in the question. thanks

Hi, mean is first moment around 0(zero),thus mean=E[(y-0)^1] =E[y] variance is the second moment around the mean= E[(y-m)^2] = E(y^2) - [E(y)]^2 thanks

hi , please see: https://forum.bionicturtle.com/threads/correlation-vs-dependence.4666/#post-12309 thanks

hi regarding third question, please see: https://forum.bionicturtle.com/threads/distribution-tables.7382/#post-26762 and https://forum.bionicturtle.com/threads/z-table-during-the-exam.5443/ plase use serach option is very handy if u have any queries . thank

please see: https://forum.bionicturtle.com/threads/frm-part-2-study-strategies.8190/ https://forum.bionicturtle.com/threads/pass-frm-2-with-100hours-preparation-study-strategy.7339/#post-26355 thanks

Hi, consistency condition is a property which satisfies the following:As sample size increases when the model selection criterion is applied to a collection of models which also contain the true model then the true model shall be selected by the criterion consistently. SIC criterion being the...

x = (125*p)^(1/3) p=.05=> x = (125*.05)^(1/3)= (6.25)^(1/3)=$1.842 is the worst price that the bond can attain at 95% CL,therefore the worst loss that the bond can have is $1.842-$5=$ -3.158 at 95% CL or the Var is $3.158.

hi, factor portfolio isolates a factor X such that its exposed to that factor X only so that beta=1 for the factor X and 0 for other factors so that factor portfolio excess return=1*risk premium of factor X=risk premium of factor X.Thus factor portfolio measures risk premium of factor X. Thus...

This is basic no-arbitrage principle: If we assume F>S*exp(rf - q)t then the arbitrageur could easily short the more expensive Forward at value F and long the Asset at price S by getting a loan of S at rate of rf ,after time t at maturity the loan payback is S*exp(rf*t) while the dividends...

Hi, Have a wonderful vacation.... thanks

Hi, @hellohi the basic calculus is involved here not the algebra. Hearing from you that you are from non-quant background i would advise you to clear your calculus basics if required(otherwise calculus is not that stringent/strict requirement for FRM in my opinion) only basic algebra and...

Hi, @gargi.adhikari i think David is referring to P as Portfolio value here therefore if σ*z is the portfolio Var in terms of % then the $ Var is simply multiply the σ*z% Var by Portfolio Value P to get the dollar loss. $Var=%Var*($P) thanks

Hi, These rates are given are discrete(in discrete compounding), you cannot use Rf = R2*T2 - R1*T1/R2-R1 when rates given are discrete rather you need to first convert the rate to continuous then use the continuous rates in the above formula. The formula is meant for continuous rates not...

Hi, monthly mortgage payments=MP=(MB0*r)/(1-(1+r)^-T) where r is the monthly rate and T is the time in months Thus change in MP for change in r from r1->r2=MB0*((r2/(1-(1+r2)^-T))-(r1/(1-(1+r1)^-T))) MB0=250000 and T=30*12=360 ,r1=5%/12=.004167,r2=4%/12=.003333 change in Monthly payment when r...

Hi, You can think of nullifying arbitrage opportunity as is common in finance, You can enter into a 3 year swap with receiving fixed rate of 3.5% at the same time enter into FRA 3 years into the future with pay on two years(yr 3-5) receiving the fixed swap rate at x%( two year forward swap rate...

hi, Yes you dont need to memorise the heteroskedasticity robust standard errors.I think you just need to know whats the implications of heteroskedasticity on standard errors like they become biased so you need to account for heteroskedasticity and correct them. thanks

Hi, Yes there is formula for the heteroskedasticity robust standard errors: http://www3.grips.ac.jp/~yamanota/Lecture_Note_9_Heteroskedasticity. When there is heteroskedasticity you need to use the heteroskedasticity robust standard errors. Is there is no heteroskedasticity or...

You have done the error :So there is a 50.8887% chance of the futures price being $12 * u = 13.59778 and a 49.1113% chance of the futures price being $12*d = 10.58996 You should have taken the spot price of the silver instead of its future price, we are calculating three-month European call...

Hi, We are in fact finding the point of minima by setting the First Partial Derivative of the Standard Deviation of the Portfolio to zero. wA+wB=1=>wB=1-wA σp²=wA²*σA²+wB²*σB²+2*ρ*σA* σB *wA*wB σp²=wA²*σA²+(1-wA)²*σB²+2*ρ*σA* σB *wA*(1-wA) Variance of portfolio σp² is a function of wA and wB...

Hi Steve, Please visit the following thread if of any help there has been many queries on the same question on the forums: https://forum.bionicturtle.com/threads/some-frm-part-2-study-strategies-that-helped-me.8190/#post-33006 thanks