CFA CFA Level 3 Contingent Immunisation (source: CFA Reading 20 pp 36-37) – please explain $541.36 million

Contingent Immunisation (source: CFA Reading 20 pp 36-37) – please explain $541.36 million

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      @Ravivooda – you’re a step ahead of me, just saw @Alta12’s question! Thanks 🙂

    • Avatar of RaviVoodaRaviVooda
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        • CFA Level 3
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        @Sophie, Thanks.

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        @Ravivooda @Sophie Many thanks!!!

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        @RaviVooda did you manage to work this one out?

      • Avatar of RaviVoodaRaviVooda
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          @alta12, I too initially felt the same but later realized that since level 3 is more descriptive, I think we need to remember more to justify/critique in detail. I am writing down notes after every subject to recollect faster during exam times. That in a way is helping revise all concepts immediately. In end I also write any mistakes I make.

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          @ravivooda Yes, lots of critique. I’m hoping to go over some of the troublesome chapters over Christmas. It seems like you and I are the only ones that have started the readings? 8-X

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          @ravivooda I’m struggling with the EOC questions. Having to reread the chapters again and again. It seems like the grey boxes and EOC do not align as much as LII.

        • Avatar of RaviVoodaRaviVooda
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            @Alta12, its nice that we are going together 🙂 I was reading this reading today only 🙂

            To answer your question, it says that “If the manager invests the entire $500 million in 4.75 percent, 10-year notes at par and the YTM immediately changes, what will happen to the dollar safety margin?
            ” and yield dropped to 3.75

            so it says when it invested FV=500, N=20 (since 10 years), I/Y=4.75/2 , PV=500, PMT=(4.75%/2)*500
            so when yield dropped to 3.75 => N=20, I/Y=3.75/2, PMT=(4.75%/2)*500, FV=500, PV=? which comes to 541.376

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