CFA CFA Level 2 Level II – Reading 44 Fixed Income

Level II – Reading 44 Fixed Income

  • This topic has 1 reply, 2 voices, and was last updated Feb-18 by jounin83.
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  • saboumboum
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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
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    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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