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Thanks David, its very useful particularly the video. May I ask you another question, same source ie GARP, I believe that there looks to be an error in an answer provided to the following question: 14.15 A stock price is currently 50. Its volatility is 20% per annum. The risk-free rate is 4%...

Hi, I hope that someone can assist with the below question that is in the GARP Notes: 14.11 A stock price is currently 40. It is known that it will be 42 or 38 at the end of a month. The risk-free rate is 4% per annum with continuous compounding. What is the value of a one-month call option...

Thanks for the clarification David, appreciate your assistance.

David, Thanks again, for my clarification though, you make the comment that..."normal backwardation" is not the same as mere "backwardation,", you also go on to say in the "trading rich/cheap thread", you make the following comment.."Also note, per the four light E[S(t)] that "normal...

The only issue is that the GARP practice exams are the same from year to year, so if you were anticipating completing say three, ie 2020, 2019 and 2018...only bother with one. Its disappointing as I would have thought that GARP would have plenty of old questions to choose from.

David, Thanks, I havent had the chance to digest that thread but will do so. If I can ask for some more insight, I have copied below an extract from another educational providers notes on this chapter: "Backwardation refers to a situation where the futures price is below the spot price. It...

David, I have nagging question concerning this topic. I am still at a loss to understand what is the difference between the expected spot price and the forward price, or is there no distinction, ie its just a matter of semantics. I am comfortable with the premise of the LO in as much as futures...

Thanks David, that is very useful to know. I have copies of the GARP practice questions so will focus on those until the exam time. This brings me to a nagging question, unfortunately this pandemic isn't going away any time soon and I have a fear that the scheduled exams due in October may well...

Hi David, your comments raise an interesting point, do your comments mean that the GARP practice exams indicative of the type of difficulty that can be expected on the exam, in your experience?

Thanks David a very thorough response. I do find this topic to be pretty complex and I have been attempting to get better clarification from consulting a number of sources, which I'm not sure is the right approach as this may well be the source of my confusion. I'm comfortable with the premise...

Hi, re the LO 13, I am seeking some clarification on the terminology that is used. My understanding (which could be wrong btw) is that the risk that is being considered here is that of curve risk, ie as Tuckman points out.."the risk that rates along the term structure move by different...

Very interesting..thankyou. I have a question concerning Reverse Conversion...a number of institutions mainly banks declared dividends then revoked the dividend, was there a discernible issue when it came to valuing optons?

Thankyou both for your responses, both very helpful. It's interesting to understand how you see the extrapolation of learning should occur.This topic I actually find it quite interesting and I thought that I had a good grasp on it, that was until I saw your notes, so your explanation is welcome...

David, I have a question more for my syllabus understanding than really anything else. In your "Chapter 5. Modern Portfolio Theory (MPT) and the Capital Asset Pricing Model (CAPM)" sample notes, under the heading "Key Ideas in MPT and CAPM", you discuss For the exam be prepared to solve for the...

Champakal...not sure if you are a bot or even a GARP employee, perhaps a GARP plant or maybe you hope that by criticising me for what I said will curry favour with GARP, I'm really not sure...but thankyou this has given me a laugh.

You may well have a point, and I didnt consider students who only have planned on taking the Nov exam, what I was considering were only those students who intended to study and take the May exam, then take the Nov exam. That said I still think that there is a possibility that the Nov exam could...

One further thing is that as the revised May exam date gets closer to the November date, its obvious that the November exam will be cancelled, what would be useful to know is that what advance warning will be made known when the new exam date is...ie one month, two months etc.

Thanks David, this make sense and being perfectly honest I should have realised this myself.

David, I found this YT presentation to be extremely useful...thankyou. I do however have a question concerning the shape of the "s" curve when looking at the Call Option Delta vs Stock Price graph. Will this shape always be the case and given its shape what determines the "s" shape.

My two cents for both the recent posts is that GARP wont care, once the exam date is announced they will simultaneously announce a latest registration date for this exam (whenever it will take place). I always remind myself that GARP is a business so will always be seeking revenue.