@ctownballer03
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Up7
I’ll shoot.
From schweser volume 2, problem 118 of mock 2 if you have them. If not, it says, “Based on the information in exhibit 3 (attached below), an investor that wishes to construct a portfolio with an active risk of 4% would most appropriately choose to combine the benchmark w/ fund A, B or C”
So the answer assumes the portfolio is unconstrained, which I wish that information was stated in the case/question, but anyways, that’s not my real issue. So they solve the problem by finding the fund w/ the highest Information Ratio which is fine, but I guess I don’t understand how to calculate breadth. Given this information, I’d think breadth would equal 12, 4, and 2, respectively, but they are calculating breadth as 12*2, 4*3, and 2*2, respectively. Any insights here? I think it could be just a poorly worded question, but maybe I’m missing something. If the text specified that there were x bets per year each on y number of independent stocks, then I’d follow that breadth =x*y, but it seems like there is information to be desired here. Any thoughts?
Thanks.
Up3googs1484 said:I’ll review the actual problem once I get out of work but, fyi, I’ve gone through most of those CFAI topic exams and they’re all of low quality IMHO. I understand why you’d want to do them obviously but I think those same ones have been up there for years and aren’t very representative.What would you recommend over the CFA posted questions? One of my friends who passed L2 recommended I understand those problems. I have the Qbank but it seems that Qbank is significantly easier than the CFA posted questions so I’m not sure what else to do. I’ve only done the Schweser EOC problems, some Qbank and some of the CFAI posted questions. Currently just re-reading some stuff I don’t have the best understanding of and grinding Qbank/CFAI posted questions as mentioned. You think the CFA text EOC problems are better? I haven’t done those.
Yeah, its gotta be wrong. They use E1*Payout Ratio to get D1, which obviously doesn’t get multiplied by (1+g). However, the E1 they used here, is different from the E1 used later in the problem for E1/r. So they’re essentially swapping E1 and E0 throughout the problem, but it’s not in a state of 0 growth, so they are not interchangeable
Up3Just figured I’d bump this one more time. Any advice for best practice questions if the CFAI questions aren’t good? I’m probably getting around 85-90% average on schweser qbank, but it seems extraordinarily easy, and probably not as good of an exam representation (relative to L1) since it rarely follows the vignette format.
Up2Such an absurd thing, but I think I follow. So we are essentially saying that our R_A_i (expected realized active returns) is our expected return and we are getting this formally through some pricing model such as CAPM, and then our Mu_i is our own subjective forecast? Then we are measuring the correlation between our own subjectively forecasted expected return and our expected return from a formal model? Is this right? It seems if this isn’t correct, then we would just be subjectively forecasting both expected returns and expected realized returns, and we would just assign ourselves an IC coefficient of 1 for perfect correlation lol..
I agree w/ your last statement, the metric seems absurd, but an ex-post IC would have some validity.
Up2googs1484 said:Sorry I forgot about you! 85-90 on the schweser bank is outstanding for a first time around but your right they are easier. Item sets are a whole skill in itself to tackle. Get Schweser Mock exams, volume 1 and 2 and bang those out. If you can manage 75 to 80% on those I’d put my money on you. If you want even more try wiley mocks or adaptprep.Com (I use them) along with kaplan. I’m also heading up to windsor week tomorrow. The CFAI EOC questions are a must in my opinion. I for one, am not a fan of their topic exams online. They seem weak. Not easy just of low quality.No worries, and thank you for your response. I have the Schweser mocks and the CFAI texts, so will do that. I appreciate the advice, sir.
Up2Stuj79 said:Yeah I’ve got L3 this year so just hammering mocks….less time spent on forums and more time spent trying to nail down the AM portion of the exam 😉How is your L2 prep coming along? I remember you crushed the prep for L1….having a similar experience?
I come check these places out when I’m confused on stuff, but I find they make me more nervous than anything. At least on analyst forums, there are so many posts about “what’s the pass rate”, “do you think you’re gonna pass’, etc.. It stresses me out more than helps me, I’d rather stay away for the most part and just focus on learning the curriculum.
Up1I hear what you’re saying, and I appreciate the answer, but I really think there is a disconnect between CFAs handling of this concept across the board. I’ve found three problems now that use E0 instead of E1, but cases where they explicitly state that there is growth between the periods. Based on intuition, it seems like E0 would make sense, as E1 would have growth factored in. Anyways, I’ve seen basically every situation with problem now and if I see it come exam day, I’ll try both, but will be relying on E1 if both result in choosable answers.
There is another discussion going on about this here:
http://www.analystforum.com/forum/s/cfa-forums/cfa-level-ii-forum/91351614#comment-91689550One of the charterholders who answers a ton of questions says he is contacting CFAI about this issue.
Up1Thank you sir, got it.
Up1googs1484 said:I think what ctown is implying is that the Frequency already implicitly includes the multiplicative effect on the number of choices. For example, if the number of stocks followed is 2 and frequency is 12 then the number of times your placing bets is 6. So I think your just twisting the terminology. Frequency is not the number of bets. Its just how often you walk to the casino counter and place a bet with the clerk. You can darn well place more than one bet every time you go to the clerk though. I would view frequency as the number of times you go to the casino clerk. Then the number of stocks followed is how bets you make anytime to go to the clerk so you for each unit of frequency there are 2, 3 4, 5 etc bets.Exactly how it makes sense to me. However, it’s wrong according to schweser lol. I’m over it @ this point. Good luck boyos, may we all survive Saturday.
Up0Got it. Very odd, but I got it. Thank you, sir!
