Hardest Topic in Part I

[jeff-1984]

As the title indicates, I was hoping someone would tell me what's the hardest and easiest topics in Part I? This may sound like a silly question but the reason im asking it because i want to organise my time by depending on this issue

 

[LeeBrittain]

My guess is that would depend heavily on the person's background. I had a masters in ag. econ and did my thesis on cattle options so the material on commodities and options was pretty easy. I thought topics like bond duration and convexity and the nuances of the different VAR types were amongst some of the most difficult in Part 1. However, you should not only consider the difficulty, but also the relative testability of topics when allocating time spent.

 

[David Harper CFA FRM]

I think Lee's answer is spot-on. As I look at 2012 P1, it's evolved (and basically stable) to a fairly evenly-distributed set in terms of difficulty and testability. Aside from selected quibbles (specifically: I think CAPM might be over-represented, I think Ong's credit risk might continue to be over-represented, and I think Linda Allen's chapter may continue to be a low testability threat), the majority of readings seem potentially difficult (to those without exposure) and testable. We've had the same experience as Lee suggests: people with experience in one domain tend to find that domain easy, while finding something else foreign.

P1 is quantitative, although my current view is (just soft opinion, please) that, from the exam perspective, it overstates regression (i.e., i think you could easily overprepare econometrics) while Hull contains the most relevant math. So, quant is the most important, however, I would point to quant in Hull along with the assigned Quant. I continue to perceive that the strongest possible "start" is confidence with Hull, as those chapters seem to cover a lot of testable material (and then: Tuckman, Jorion and I would locate Stock Watson as 4th/4). If I were to personally order the big 4 texts in terms of test relevance, here is my order: Hull, Jorion, Tuckman, S&W. If that helps...

 

[jeff-1984]

You guys made it clear : a lot depends on the person's background. However, David what you were saying in the part 2 of your answer, are you suggesting that I start by the names you mentioned (Hull Tuckman Jorian and SW ) ? The ideal way is to start from Topic 1 and continue or there's another sequence/way?

 

[David Harper CFA FRM]

"Start" was a terrible word choice I was referring to neither (i) difficulty [your question] nor (ii) sequence of studying. I was referring to Lee's point about TESTABILITY. I meant, regardless of the sequence, if I had to pick one area that is most testable, or that gives the most necessary foundation for P1, it would be the Hull chapters.

With respect to sequence, I sincerely like GARP's given sequence, from T1 to T4: I think T1 (although too much on CAPM) naturally leads to T2 (although don't let regression be a time trap). And then I don't think there is anything magic or necessary about T3 versus T4, EXCEPT that T3 is more important (more testable, on average) and so, T3 then T4, makes sense to me. Sorry for confusion.

 

[jeff-1984]

Hi David,

I didn't want to open a new thread but i have an inquiry regarding the practice questions of the foundations topic. Besides the 2012 sheet you submitted, I couldn't find anything from 2011 in the study planner(i downloaded the 2010 ones) which surprised me because i read somewhere that there are many practice questions available. I just want to know am I searching in the wrong place or these are the only ones available ?

 

[David Harper CFA FRM]

Hi Jeffers,

That's correct, we are posting another T1 (.62 to .64; which finished the Elton).

There are many questions, IMO. The 2010 questions refer generally (except for Grinold) to texts/AIMs that have not changed since then, so Year 2010 does not mean they aren't relevant. After we get through the videos, we will start to consolidate/streamline in sections like Foundations where we've basically covered the AIM set. If you are looking in the Study Planner (http://www.bionicturtle.com/my-account/study-planner), you are looking in the correct place.

Thanks,

 

[Aleksander Hansen]

I think Lee's answer is spot-on. As I look at 2012 P1, it's evolved (and basically stable) to a fairly evenly-distributed set in terms of difficulty and testability. Aside from selected quibbles (specifically: I think CAPM might be over-represented, I think Ong's credit risk might continue to be over-represented, and I think Linda Allen's chapter may continue to be a low testability threat), the majority of readings seem potentially difficult (to those without exposure) and testable. We've had the same experience as Lee suggests: people with experience in one domain tend to find that domain easy, while finding something else foreign.

P1 is quantitative, although my current view is (just soft opinion, please) that, from the exam perspective, it overstates regression (i.e., i think you could easily overprepare econometrics) while Hull contains the most relevant math. So, quant is the most important, however, I would point to quant in Hull along with the assigned Quant. I continue to perceive that the strongest possible "start" is confidence with Hull, as those chapters seem to cover a lot of testable material (and then: Tuckman, Jorion and I would locate Stock Watson as 4th/4). If I were to personally order the big 4 texts in terms of test relevance, here is my order: Hull, Jorion, Tuckman, S&W. If that helps...

David,

Quick question: when you say that CAPM and Ong's credit risk continue to be over represented, do you mean in terms of just the assigned readings, the number of exam questions pertaining to those topics or both?

Best,
Aleks

 

[David Harper CFA FRM]

Hi Aleks,

Right, maybe i should have distinguished. W.r.t. CAPM, I perceive it over-represented both in the curriculum and (as always, based merely on my view of the historical sample) in the exam; as they share a root in Stulz, who has (or at least, had) a strong influence on the FRM, I think of CAPM/BSM/Merton as a set, and this set (with the atypical exception of the last exam, which neglected BSM in vexing manner), this set receives significant attention both in the readings (obviously) but also in the exam.

W.r.t. Ong's credit risk: over-represented in the readings (AIM) without corresponding testability. Although we've seen Ong's UL (= one 1 SD) tested, it's been light and not each year. If history is a trend, it seems possible that the three chapters of Ong (quite a few AIMs) are lightly tested or not at all. I dislike Ong because is old surviving reading yet it has never materialized with strong testability. I think it should either "season" into a robustly testable topic or get updated. But Ong is neither, it's like "on the bubble" content (e.g., his concepts like UGD aren't in the handbook). I hope that clarifies.

Thanks,

 

[Aleksander Hansen]

Thanks for the clarification David, good to know.
By the way, I noticed that when you replied to my question I got an e-mail as usual alerting me to it, but this one was a nicely formatted email which contained your answer as well.
I assume this is a new feature as I have never seen it before.
Very useful - nice work!

 

[David Harper CFA FRM]

Aleks,

Thank you for noticing, I just noticed that new feature myself. Our developers upgraded the XF forum this morning, to the latest version of http://xenforo.com/ ...so I'm still discovering new features. I didn't plan for any of them specifically (although I do think we can improve the search and would like to find a better way to tag for organization).

The only thing i did last year was make the (not cheap $, frankly) decision to abandon expressionengine's built-in forum, that we used for years, in favor of a 3rd-party best in class forum. We selected xenforo, and I am delighted with that choice (I wanted best in class forum ... if we are serious, we need to be serious about the social hooks, eg) but the more difficult aspect is integration with the EE CMS, which is non-trivial, and i think we are still the only EE site that bridges XF ... that has been done by Shawn, Andrew, and Aaron, our development partners at Visual Chefs (http://www.visualchefs.com/ ) who I can't say enough good things about. I've worked with dozens of web developer and designers and it's easily the most challenging/frustrating interface for me but VC is just in a separate category of professionalism; e.g., today they told me when they were going to do it, they did it when they said, it works, i'm not spending all day pulling my hair out, etc ... every online business, except for our competition who i would like to refer to anyone except VC, should have a partner like Visual Chefs.