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passed 1111, however, cant take part 2 until Nov. Have CFA L2

Thanks to you guys, I passed my Part 1 exam, looking to conquer part 2 with you guys again!

Merry Christmas to all you peeps! :)

cant seem to download pdf's it instead opens up same link

All the best to my fellow candidates! :)

Hi, thanks Shakti, I was revisiting the topic, after reading book, your replies and other threads, I realized where was the mistake in my interpretation. Thanks a lot! :)

Yea, the strategies remain the same, but I was doing like this, r=50%. Now, I try to find the risk free rate from the normal put call parity equation, where r comes at 0. Thus, bond is overpriced in PCP, so call has to be under priced and put is overpriced (using p=Bond-Spot), also, since the...

Answer is (a) with Mean = 48, and Variance of 6.93 I dont know why you labelled it as VaR though. For mean, just create the binomial tree and value the branches its going to be 60*0.4+50*0.6= 54 for the upper branch and 50*0.4+40*0.6=44 Now, we have to calculate this for another branch, and its...

thanks a lot, please let it accrue

Hi Amir, As S666 said, a market in backwardation or contango can experience both weakening as well as strengthening of basis. It would be better understood if you do not mix up basis with contango/ backwardation. Also, you said, strengthening of basis means cash price> future price. This is...

this thread is nice, cleared a lot of concept. Thank you guys!

I am confused, libor rate is an interest rate, so in that case, interest rate and the futures are negatively correlated?

In Hull Interest rate futures, he shows that future rates are higher than forwards due to interim cash flows and thus there is a convexity adjustment for futures and forwards. However, I was thinking like this, the LIBOR rate is negatively correlated with that of the Eurodollar futures. In that...

Hey guys, I am having problems with this question: I can understand why the answer is D, but what i am having trouble to understand is why the Option C is a replication of the swap.

Hi Mam, I think you are correct. Normally, when we BUY an option, we want the volatility to be high (so that there are chances of high payoff) It is exactly the opposite in case of writing an option. When we are short an option, we want the volatility to be low (else we will have chances of a...

Hi @S666 , your last line about continuous probability distribution was very very helpful. Thanks!

Hi valima! Its actually a nice question, well, we can say that the expected loss that we factor into while giving loans comprises of the firm specific risk (and a bit of estimation of the industry related risk) However, unexpected losses are related to the performance of the economy as a whole...

Hmm, I got it, I had a (false*) notion that Jensens alpha had something to do with regression.

I am a bit curious to know whether jensen's alpha has any relation to the error term in the security characteristic line? Security characteristic line regresses (Ri-Rf) against (Rm-Rf). In this case, if i regress, then (Ri-Rf) = α + β(Rm-Rf) + ei then, Ri= α + [Rf + β(Rm-Rf)] + ei then, Ri =...