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P(c)=prob of correct answer picking out of 5=1/5 P(p)=prob to pass exam=1-prob of failing prob of failing is choosing 0or1or2 correct answers out of 5=10C0*.2^0*.8^10+10C1*.2^1*.8^9+10C2*.2^2*.8^8 So P(p)=1-( 10C0*.2^0*.8^10+10C1*.2^1*.8^9+10C2*.2^2*.8^8) Thanks

Hi there are two cases possible: 1)population std deviation is given:Whenever sample size(# observations)<30 use t stat look up. For size>=30 its safe to use z stat. 2)population std deviation is not given but sample std deviation is given as in above examples:sample size <30 use t stat/look up...

Hi Formula with 1- is correct. We are addign Pvs of MP 477.42 over T months to arrive at o/s principal so, Sigma(n=1 to T)MP/(1+r/12)^n=MP/(1+r/12)+ MP/(1+r/12)^2+....+ MP/(1+r/12)^T is gp with first term MP/(1+r/12) and cr=1/(1+r/12)so Gp sum=a(1-cr^T)/(1-cr)=[ MP/(1+r/12)]*(1-(1/1+r/12)^T)/...

Hi Just just concentrate on the question how the problem arised in the case,i think that is the most important question and you can get to the root of the cause. This will make the case crystal clear. Thanks

1) these portion has low to medium testability,u can expext max2-3Qs. 2) simple questions asking for what is what 3)u dont need lot of practice for these portion u can see this from prac questions included by David,he includes only those questions that have high testability. Dont expect much...

Hi Yes you need to take away important points from these sections,mug up if neccessary. I would advise to give a quick read and note down important points in a notebook to revise later before exam. Thankd

Hi Price Vs Time to maturity should be -ve,P(2yr maturity,annual conupon)=5/1.1+105/1.1^2=91.32 P(3yr maturity,annual coupon)=5/1.1+5/1.1^2+105/1.1^3=87.56<91.32 Identical coupon and yield with increasing maturity is decreasing price. Also price should have + relation to rating,as high rating...

Hi I have notes of 2013. Please do not regard it as 2015,these all things i mentioned above are from my readings of David notes of 2013,may be some changes were made in subsequent years. Thanks

Hi Yes please post under relavant section. Please see the relevant section under forum each section has a name after the major topic area for each part,for e.g to ask question related to quantitative section of part I post under the section named Quantitative Analysis,similarly under other...

Hi You can go through these readings if time permits,i would advise to give a quick read atleast if there are time constraints. These readings being optional are not that important from exam point of view but you should know some important points related to these readings. May be you can read...

See the possible states three yrs down the line for A rating is Default in 1st yr P(D)=0% as A rating has 0% PD in 1yr Default in 2nd yr can happen when in 1st yr A migrated to B and Default in 2nd yr i.e. BD P(BD)=5%*10% orAD P(AD)=95%*0%=0% u see second is conditional probability dependend on...

Yes there can be multiple yield curves possible, we can collapse interest rate tree to various yield curves based on our assumptions. I am talking of any particular yield curve in general shall give definite evolution of interest rate over time. Based on a specific set of assumptions for tree...

Hi Value of swap to fixed rate payer bank at end of 3rd yr=pv of net received amt at end of 4th yr Fixed rate paid=6.5% (discrete) Floating rate received is given continous so convert it to discrete,=exp(Rc)-1=exp(.0575)-1=5.919%[forget 6.25% its rate at begining of contract i think does not...

Hi It should be sixth only,we are given flaoting rate at t=3mnth,this rate at end of 3rd month shall determine next net pay over next quarter which is at end of sixth month. Net pay at end of 6th mnth=fixed pay-floating received based on floating rate at end of previous quarter i.e. At end of...

Hi [R(Asset)] is combination of return attributed to policy +return due to investment mgr selection ,now VaR[R(policy mix)] is further reduced due to diversification acheived by selection of different no of mgrs for each asset class, if VaR[R(policy mix)] is Var of return due to asset classes...

Hi Different bonds have different CFs associated with them. Under bond futures contract a dealer can deliver any bond with a paeticular CF that minimizes his cost,first dealer shall buy bond to deliver in mkt for Qouted price +AI and deliver it under contract at price CF*settlement price+AI so...

Hi Interest rate tree gives possible evolution of interest rate over time with associated probabilities,while yield curve gives a definite evolution of interest rate over time. Basically tree models various interest rate paths possible over time thereby generating several possible interest rate...

Hi Yes the SE formula is Sample SD/SQRT(Sample size) as sqrt( Sample Variance)=Sample SD =>SE= SQRT(Sample Variance/N) , second one there is a typo it should be SQRT(Sample Variance/N) Thanks

Hi I can find these books: 1)http://www.amazon.in/Securities-Finance-Lending-Repurchase-Agreements/dp/0471678910 2) http://www.eseclending.com/pdfs/Data_Explorer_Intro_to_Sec_Lending.pdf Thanks

Hi Surplus is given by s=Assets(A)-Liabilities(L)=A-L Take variance on both sides, Var(s)=Var(A-L)=Var(A)+Var(L)-2*Cov(A,L)[we know that Var(a-b)= Var(a)+Var(b)-2*Cov(a,b)] Var(s)=Var(A-L)=Var(A)+Var(L)-2*rho(A,L)*vol A*vol L[we know Cov(a,b)= rho(a,b)*vol a*vol b] As Volatilities are...