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Hi cdbsmith, Thanks for your insightful answers and clarification. It's definitely more clear to me know! Cheers! Cipher2014

Could someone help to answer my question? Thanks!

Could someone help answer my question? Thanks! Cipher

Maybe it's confusing because of graphs like this: Source: http://www.investopedia.com/articles/economics/08/economic-capital.asp

Hi David, I just want to clarify in Grinold Chapter 14, what's the relationship between the portfolio construction techniques (1) Screens (2) Stratification (3)Linear Programming (4) Quadratic Programming and the Refine Alpha and the use of a simple unconstrained mean-variance optimization to...

Hi, I'm going through the structured finance reading material and have a few very basic question that I'd like to clarify before moving on. Q1: Is Structured Product simply a security created through the process of Structured Financing (e.g. A class of security with higher credit rating than...

@ashanks - Thank you very much for the insight. I have started studying and agree with you that the general concepts from part I is a must have. But I think some of the more specific formulas from Part I likely won't be tested so there is no need to re-memorize them!

That's good to know David! Thank you very much for taking the time to answer my questions!

Hi, I'm planning to take part 2 exam this coming May. But it's been 2 years since I passed the part 1 exam, and most of the material is a bit of a blur now. Could someone shed some light on how much material from part 1 will be tested for part 2 (if at all)? Do I have to know details such as...

Congratulations on passing the Part II exam everyone! As you all have sat for the exam, could someone kindly let me know if any of the Part I material is tested in the Part II exam? I'm going to take the part II exam this coming May but it's been 2 years since I passed my Part I, and most of...

Hi ert, I was confused for the same reasons at first. The catch here is that we are going to Exercising the option. It no longer matters how the price of the option changes if we decide to exercise. Hence the 6 factors that changes option prices should be out of the picture. We should now...

Hi David, I remember in one of your videos you mentioned that there are 3 approaches to VaR Historical - historical data Monte Carlo - future data Parametric - no data My question is: for MC, the first step is to generate price paths using GBM. For that, while e is randomized, don't we...

Hi David, What's the difference between a bull spread and a bullish collar? The final graph after combining the options looks similar. I'm sure there are some differences though. Could you elaborate? Thanks, Ying

Hi Aleksander, Thanks for the detailed explanation! I can see how the randomizing component of bootstrapping is alluding to MC. My question is then what exactly is "Historical Random Sampling" (I've heard of ppl using this before) Is this the same as Bootstrapping since Historical = using...

Hi David, I'm looking at page 91 of the Study Note P1.T2 where you compare Monte Carlo with Bootstrapping. What I'm not clear about is how is Bootstrapping different from Historical Simulation with random sampling? To me, the Bootstrapping method, as discribed in the text, is more in line with...

I think what got me confused is the naming convention: "Capital Asset Pricing Model" is associated with the "Security Market Line" where as "Capital Market Line", dispite of having "Capital" in its name is actually not part of CAPM. Thanks for the detailed explanation David!

Hi David, As I read the chapters on CAPM, I'm a bit confused as to what's the relationship between SML, CML and CAPM. The book seem to associate CAPM exclusively with SML, but CML is also in the same chapter. Could you kindly explain a that's the association between CML to CAPM. Is CML also...