Got another random a$$ one from that same reading with the Yardeni model: Molodovsky Effect: The countercyclical tendancy for stocks to have high P/E’s at the bottom of a business cycle (due to low earnings) and low P/E’s at the top of the business cycle (due to higher earnings). This would tend to mislead the Graham & Dodd traders…
I know!
lol, search for MOLODOVSKY on this forum- it was a running joke last year… you’ll find that word in a strangely large amount of posts.
Haha. no kiddin’… you guys were all over Molodovsky last year. I’ll keep my fingers crossed for a question for you 
I forsee a lengthy question on volga, gamma, and the rest of the greeks
volga - is a 'V’o’L’atility 'O’f the 'G’amma to tha change in 'A’lpha?
I suspect some PM questions on tax efficiency and tax equivalent accruals, etc. Very testable, and quite relevant. Also a huge part of Level III. So maybe that means they’ll save it for Level III instead?? You can make yourself nuts with this. Ha!
Delta = change in option price with change in underlying Gamma = second derivative of option price with respect to underlying Theta = time decay, change in price of option with time change Rho = change in price of option with change in volatility Vega = v is like voltaility, change in option value with change in volatiliy of underlying If that wasn’t enough… Charm = rate of change in delta over the passage of time Color = change of rate of gamma over the passage of time Lambda, percentage change in option value per change in underlying price Speed = rate of change in gamma with respect to change in underlying price Vomma = second order sensitivity to implied volatility It never ends…
rho – isn’t it change wrt rate? my way of remembering… v - vega - volatility r - rho - rate t - theta - time gamma and delta - relate to asset price…
TheAliMan Wrote: ------------------------------------------------------- > Rho = change in price of option with change in > volatility Rho depends on Risk Free Rate, no?
I mean interest rates! Ugh!!
Ali, wtf is Charm, Color, Speed, Vomma, etc. I don’t remember those at all.
Oh they are outside the curriculum. Just messing around, sorry.
jeez. Charm, color?? this is starting to look like my physics from undergrad. Good ol’ bosons and fermions. I digress…
i’m thinking cfai will throw on a vignette on mbs and how high quality they are just to see if people will answer how the curriculum tells them to.