Anyone know why one would divide the BPV of a swap by 100 and refer to it as a percent when calculating the NP? I took the Wiley Mock B PM yesterday and was given the following for the Swap contract: basis point value of $6.87.
I did same mock yesterday.
% is just to say that the BPV must be divided by 100 → so from 6.87 you have 0.0687 (6.87%)
The problem is that they should have stated that BPV of swap was for 100 of notional (as the curriculum does), otherwise they just expect you to guess?
I got it wrong as well.
Thank you for your response! That makes sense now that it’s for 100 of notional. Still odd to refer to it as a % though? Isn’t it $6.87 per 100 so 0.0687 per 1?
Exactly, but if they don’t specify it, I would presume 6.87 BPV is for 1 unit of notional.
Those Wiley mocks were pretty bad, I don’t know what you think but I was not satisfied at all, many questions left from past years that are not relevant anymore.
I agree, I was not impressed. There was even a question asking for information that wasn’t available… Specifically 5iv about volatility of the swiss bank.
Will move on to the CFAI tests next weekend.
Thanks again and good luck to you!
Ah I think I know this: because swap is quoted on a 100 basis so to get notional principal you need to devide by 100