@christine
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Up6
@diya you do seem super well read! So you’re currently working towards a PhD?
Up6Any gamble could be a reflection of risk/return…but I get your point.
Up6I agree with @diya – 20 mins is OK at this stage, and I think the timing would also vary by topic. The item set format takes a bit of getting used to, but I promise you’ll adjust quickly as long as you keep at it.
Keep on practicing and don’t worry about timing for a while – the time pressure at this stage might be additionally causing you to panic as well. Check your timing again after about 2 weeks of practice – I think you’ll be surprised 🙂
Up5Try and get a taste of an essay practice exam as early as possible.
Up5@Sophie thanks again. It helps to hear from a seasoned professional 😉 I’m not a math wizard myself, but I had vaguely heard that Fixed Income requires quant skills. Maybe they were referring to Quant Finance within Fixed Income or HFT X_X
I doubt they mean they need someone with a quantitative qualification, just someone who is good in math. Which is unavoidable in finance 🙂
Up5Love Michael Lewis – Liar’s Poker was really funny.
Up5I’m not particularly strong with GIPS, but I’ll give it a go.
A carve-out is a portion of a portfolio that can be representative of a investment strategy or asset class. The rationale here is that say if a client wants to see the performance of a firm in say equities, they can carve out the equity portion of the portfolio to allow for equity-only performance evaluation.
Now since asset management involves buying and selling stocks together with other asset classes, you have two problems with cash.
1. Cash gets mixed between classes. Cash can be used to buy and sell different asset classes, so obviously it becomes more difficult to carve out – i.e. if you sold some stocks and bought bonds with the cash, then made a ton of money from the bonds, sold them and reinvested in equities, that makes you look good equities-wise, even though it’s not due to your equity performance. Prior to 1 Jan 2010, you were allowed rectify this problem by ‘allocating’ cash in your portfolio to a carve-out ‘in a timely and consistent manner’, as well as accounting cash separately. This allocation method is very subjective, so after 1 Jan 2010 this method was scrapped. You can now only have a carve out if you’ve accounted your cash balance separately, e.g. no selling stocks to buy bonds if you want to carve out equities.
2. Presence of cash is also indicative of performance. You must always include your cash balance for your carve-out’s total returns. Why? The presence of cash itself is obviously indicative of performance. For example if I keep selling my poor-performing stocks and sit on the cash, my equities start to look very good if evaluated on its own. If you see the large cash balance, then you start to see a much better picture of my stock-managing qualities – fair representation.
Hope that helps – let me know if that solved your issues @ajfinance!
Up5Peanut butter ice-cream is delish. I’ve only tried it recently.
Up5Yes please @diya – can you email team AT 300hours DOT com? I’ll drop it into a spreadsheet and share around.
Up5Yeah this is next on my reading list. I loved Liar’s Poker and I can’t wait to try this one. Need to get it on my Kindle 🙂
Up5Whoaaaaa.
Up5Just signed up – I’ll report back later 😀
Up5Well spotted @AJFinance!
