Level 2 AIMs

[Hend Abuenein]

Hi David,
I hope you're having a good time off.

I plan on starting to read and get myself acquainted with the AIMs of level 2,
So are the AIMs going to be the same for 2012?
And I'm going to start reading from Jorion's, until I can order from GARP. Do you think that's a good place to start? Would you recommend any other way?

Thank you

 

[Suzanne Evans]

Hi Hend,

Unfortunately, we won't have the 2012 AIMS until the end of December or beginning of January. You can find our FAQ here about 2012 content.

Thanks,
Suzanne

 

[Hend Abuenein]

Hi Suzanne,

The answer to this question FAQ :"
When will you begin the May and November 2012 study program?"

Says that content release for 2011 material for L2 began in April!
Should we expect the same for 2012 content?
And if so, isn't that a bit too late?

 

[AG]

Personally I've found that atleast 80% of market and credit risk is retained next year(2010 vs 2011). You can start there. Basel and current issues part may be ignored for the time being until the AIMS are released.

 

[Hend Abuenein]

Thank you AG

 

[David Harper CFA FRM]

Hi Hend,

I hope you are doing well.

I haven't even seen the draft 2012 AIMS yet. They will change, but the extent of their change is hard to predict (by definition, T9 changes significantly. But also T7/ops due to its nature. Then T8/investment. But some of the T6/credit is ripe for updating).

For a head start, I would probably look to:
* Basel III readings; i.e., we know they will re-appear
* Jorion (I agree with you), especially Chapter 7 Analytical VaR (marginal VaR, etc)
* Dowd chapters
* Hull and Tuckman

Re: "content release for 2011 material for L2 began in April! Should we expect the same for 2012 content?"
No, probably earlier this year. I will probably alternate L1 then L2 to give L2 an earlier start. I'll know more when we see the AIMs.

Thanks! David

 

[Hend Abuenein]

Hi David,
Thank you for your reply, and I hope you had a good time away.

About the AIMs you recommend I start with, does L2 have over lapping subjects like in L1? Or will every topic make sense as a unit on its own?
Some subjects in L1 just couldn't be grasped until you've gone over the whole material and tied loose ends together.

Thank you

 

[David Harper CFA FRM]

Hi Hend,

Thanks for the good wishes. It is an interesting question. As you may know, the theory of the FRM is that L1 focuses on (introduces) tools and theory while L2 is supposed to build on L1 with applications and practices. I think the success of the implementation is debatable, but I do think this is true in this sense: much of L2 depends more on corresponding L1 than other L2 (the most obvious of this is "distributions:" operational risk/ERM is largely the application of distributional concepts).

On the one hand, I really doubt a new candidate would perceive a high degree of overlap between L2 topics; in my opinion, the connections do not reveal easily on the first pass. So, from a fresh perspective, I believe the L2 topics (T5, T6, T7, T8, T9) do NOT reveal as highly overlapping.

On the other hand, some overlaps (to L1 or other L2) include:

• As John Hull's book is quite seasoned and logically sequenced, the Hull chapters do benefit from sequencing; e.g., Hull exotic options should come after options and option trading!
• Tuckman's chapters continue the L1 fixed income focus on sensitivities (e.g., duration)
• Dowd's market risk material is difficult (e.g., EVT) and builds on L1; to fully comprehend Dowd arguably you need to read him from the start.
• OpRisk is largely about the intermediate/advanced application of distributions
• Jorion's portfolio VaR build's on the CAPM/mean variance framework (again, an L2 overlapping with L1 more than neighbor L2)
• Lately, the current issues have been well-chosen in the sense that they do build on other L1/L2 topics

... so mostly, I find an L1-->L2 linkage rather than "within L2 overlaps".

I personally find the following more standalone (less overlap-ish) than the other topics:

• Credit and credit derivatives
• Much of the investment topics; e.g., hedge fund strategies

(consistent with above, in the sense that I find that market risk and operational risk build much on L1). I hope that's a bit helpful, I think there could be a hundred different, valid answers to the question...thanks, David

 

[Hend Abuenein]

I book marked this for reference every time I begin a new topic. Thanks David.

 

[David Harper CFA FRM]

Hi Hend,

Glad to help ... HOWEVER, please note that I will be posting a more comprehensive update once I see the final AIMs later this week, see
http://forum.bionicturtle.com/threads/detailed-comparison-of-readings-aims-2011-vs-2012.5011/
... so that should trump the above, as the above is historical (I've seen the draft L1 but I have not seen the draft L2). thanks, David

 

[Hend Abuenein]

Yes of course, I'm waiting for that. I'm gonna begin flipping through Jorion's tomorrow, and till end of this week.
Thanks again.