Hi Guys! I've got a quite specific question on the reading 44. In the question 4 and 5 in the curriculum, the solution uses (p 381-382), for discounting the Year 1 Cash flows, the par rate instead of the rate in the binomial interest rate tree. It's the first time I see that. Does someone know why? Are there other cases where you use the par rates instead of the binomial interest rate tree? Thank you in advance!

Hi saboum, Here's the response from CFAI : There was a typo in the node for Year 0 in Exhibit 2 ; the number should be 2.2500% instead of 2.5000%. This error will be addressed when the online Level II Errata is updated. I hope this helps.

A CFA Level 2 Discussion About Level II

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This topic has 1 reply, 2 voices, and was last updated Feb-182:56 pm by jounin83.

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- saboumboum
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  - CFA Level 2
  07 Feb 2018 at 8:58 am
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  Hi Guys!
  
  I’ve got a quite specific question on the reading 44. In the question 4 and 5 in the curriculum, the solution uses (p 381-382), for discounting the Year 1 Cash flows, the par rate instead of the rate in the binomial interest rate tree. It’s the first time I see that. Does someone know why? Are there other cases where you use the par rates instead of the binomial interest rate tree? Thank you in advance!
- jounin83
  Participant
  - CFA Level 2
  21 Feb 2018 at 2:56 pm
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  1
  ::
  Hi saboum,
  
  Here’s the response from CFAI :
  
  There was a typo in the node for Year 0 in Exhibit 2 ; the number should be 2.2500% instead of 2.5000%. This error will be addressed when the online Level II Errata is updated.
  
  I hope this helps.
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