The Philosophy of Bionic Turtle Logo's

[syaiful]

Hi David, ;-)

Just out of my Curiosity, i want to know the meaning of 'Turtle with the Sticky Gear on his Back'

also, it has been 2 week since i start up my preparation with Market Risk (Hull).

I found we can go through all FRM material with 2 approach :

1. going through Topic by Topic (a.k.a AIM by AIM) --> Theory + Numerical Calculations

2. Focusing on theory first (necgleting about numerical calculation), after that go back again with focusing on Numerical Calculations

do you ever heard someone passed the exam with the 2nd approach ?


regards,

*Syaiful

 

[David Harper CFA FRM]

Hi Syaiful,

Re: bionic turtle, my first idea was bionic tutor. But then i thought, that is sort of plain. So i changed to bionic turtle. There is honestly no meaning except I always meant to convey a friendly, humble place where even the self-perceived slowest can triumph over finance And BT, I am told is memorable name. But, here is the problem: it does not tell you what we do. So, if i could re-start, I would choose a name that reflects what we do, rather than trying to be cute. If you ever start a business, in regard to the name, that is my advice: don't be too clever, give it a name that says "this is what we do." Just my opinion...

Re the two approaches, I think this is a *fabulous* question. I have given this much thought. Our first method was similiar to (2). It seems to me the problem with (2) is: it can be difficult to retain the theory without proximate applications. But, yes, I have seen (2) effective, in particular for those who start early. The nearer you get to the exam, the more impractical (2) becomes. The more we teach the FRM, the more I favor something nearer to (1) simply because the feedback I've gotten is: the best preparation is doing practice problems. So, if you forced a choice on me, I'd vote (1).

The weakness of (1) only, again just IMO, is that some candidates/students have been unduly trained to rote memorize. The FRM penalizes rote memorization. So (1) will tend to de-emphasize the theory that connects ideas and gives linkages between ideas and across the disciplines. What i mean is, there will be 500-600 AIMs probably, but there is a much smaller set of "archetypal" ideas that blast across the details.

But, I am a big fan of *two passes," I have long advocated two passes. For example, in credit derivatives, one way to approach is (i) first pass to understand mechanics; e.g., what is a credit default swap, how does it work. So, okay, we need to know that. But that will not be the test question! The test question will be more like, e.g., does a CDS hedge against credit deterioration? So: (ii) second pass is: how is/can CDS be used from a risk perspective. But, we also have the CDS valuation. So, perhaps, a CDS requires three mental passes: mechanics, risk application, valuation

okay, sorry for length, just thinking out loud. I do strongly feel that the "numerical calculaions" or, if i can call this "financial modelling" is supremely useful. Modelling is foundational to everything in the FRM. Modelling forces us to articulate our assumptions. e.g., we may think, okay i understand the theory of a currency swap. But then we go to model, and all sorts of questions pop up. Further, it is the best way to explore the weaknesses in theory, which I predict (due to the credit crunch) will play a big role in 2009 FRM (i.e., model risk). For example, in FRM we study VaR but also we study the limitations of VaR (an interesting discussion yesterday on naked capitalism). Now, we can talk about the "theory" of how VaR is not coherent (sub-additive) but, I feel, seeing that in a modelling exercise is much better. If i say to you, lack of sub-additivity means that the risk measure can penalize diversification (risk of instrument + risk of instrument < risk of two instruments combined), you are likely to say "what does that mean, why do we care?" But, if i show you relevant numerical excercise, maybe it will be more meaningful.

David

 

[syaiful]

Hi David,

"Mental Passes"...hemm this is interesting mindset ! :lol:

My next question is :

1. Which one is more effective ?
someone who studying Practice Questions vs someone who studying Practice Questions with "Mental Passes" Focus

2. Can we generalize this "Mental Passes" ? (based on your experience about old exam of course)
so we can came up with Matrix summary of "Mental Passes"...


regards,

*Syaiful