I have a problem understanding the concept of marginal contribution to risk. I do not understand exhibit 7 on page 194 in volumn 6. Also example 6
SKO…this is purely a guess on my part but I don’t believe too far off expecting. You will use a computer. Paper is risky for transmission. White boards and markers can be disinfected. Again purely a guess.
Hi Marc finding your jumpstart videos quite helpful so far. Recommended to a friend who can afford only either the jumpstart videos or the bootcamp… which would you recommend for someone who could pick only one due to budget constraints?
removed the implications by updating the post. I can delete the entire post if you like but that might defeat the purpose of AMA. Nevertheless thank you very much for reconsidering your position on BC.
I may be able to email you later today or tomorrow regarding extension request as i will have to search for old emails from CFAI. Hope that is fine
understood. ty.
That topic tries to allocate asset class weights to each asset class based on thier contribution to total risk (St dev) to the portfolio. Each asset beta is multiplied by the St dev to see how much each asset class contributed to the total risk. Higher asset beta classes add more, lower beta asset classes contribute less. That MCTR is then used in the denominator of a “sharp like ratio” that allocates the 100% weight of the portfolio equally across the range of assets. Your goal is to have the ratio of excess return (asset class return minus the risk free rate) divided by the MCTR the same across all asset classes. Rather than being MVO efficient you use the contribution to risk of each asset class to determine the weights. It is an optimization program that solves for the weights.
Thank you. Send me an email and I’ll add you to the list for the Spring Bootcamps.
That’s great Marc. Really appreciate it. Thanks.
SKO - typing formulas will be your choice in the CBT. You will be asked for a solution to a calculation. You type that answer. If you desire to type the formula (the CFA Institute won’t ask for formulas) using a equation editor it may provide partial credit if your number solution is incorrect BUT this is cumbersome and takes time. Alternatively if you “type” how you got to your numerical solution that could provide partial credit instead. I’d opt for the later choice than the prior.
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Send me an email Bellur and I’ll add you to the Spring list, be sure to show me your deferment letter fro the CFAI, thank you.
Exhibit 27 in R33 SS14 effects on bank insurer asset and liability volatility. Having difficulty grasping these formulas and the subsequent BB8 and B9 mini cases. Apart from purely memorizing, any tips on how to handle these?
If I had a choice…I’d pick the Jumpstart Videos as they are 80 hours and the feedback I heard form a recent exam taker was the exam was no surprise and everything on the exam I cover in the videos completely. Plus you can watch them over and over, highly recommended.
First consider that leverage, margin or borrowing increases the volatility of any asset. If you borrow $80,000 to buy a $100,000 home the $20,000 equity will be volatile when the asset value moves up or down. If the house (asset) falls to $90,000 a 10% drop then your equity fell to $10,000 from $20,000 or a 50% drop, highly volatile. That kinda help…? A bank has a similar balance sheet.
Hi Marc , previous for paper based exam you mentioned practicing BB, EOC , White Text and practice on reams of paper. Now due to computer based test , practicing by writing is out of picture. What is worst is we cannot draw diagrams anymore for example option payoff. How would you recommend we practice now
I’d get on the computer and practice typing your solutions to the “justify, describe, ect…” type questions. As for calculations use paper or get a white board as I mentioned above. The morning essay has rarely asked for payoff diagrams so I would not worry about that since there is no way to capture your solution. The problems that I have always recommended to work before the exam does not change., what changes is now you type your practice answers instead of writing them on paper. Crazy I know!
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I just spoke with CFA…I was told that Prometric will use pens/pencils paper because of transmission risk, as opposed to having you turn back in a laminate board. But do your own research, to see if you get the same answer.
Also, make sure you go to the prometric site, they have some mask requirements (assuming we are still in mask mode).
" Masks with exhale/one-way valves are prohibited to use at the testing center, due to the lack of viral particle filtration provided by these masks . Masks with wearable technology are also prohibited. Any test taker that comes to the test center without an acceptable mask will not be allowed to test, marked as a “no show,” and will not be eligible for a free reschedule.
I have heard mixed information on the pencils and white board. I hope its pencil and paper. Just in case maybe work with both as a suggestion. Things are changing all the time…just saying.
Thank you Boondocksaint
Yes agreed…I have a feeling a lot may vary by center. It seems the Institute doesn’t have a consistent set of standards they can employ over a third party test administrator. Prometric won’t give a squat about a “CFA way”
I have sent you the mail with the cfa deferred letter attached. Thank Again!