Option Sensitivity Measures: The “Greeks”
After completing this reading you should be able to: Describe and assess the risks associated with naked and covered option positions. Describe the use of a stop-loss hedging strategy, including its advantages and disadvantages, and explain how this strategy can…
Sound Management of Risk Related to Money Laundering and Financing of Terrorism
After completing this reading, the candidate should be able to: Explain the best practices the Basel Committee recommends for the assessment, management, mitigation, and monitoring of money laundering and financing of terrorism (ML/FT) risks. Describe recommended practices for the acceptance,…
Common Behavioral Biases
Mnemonic Devices for Easy Recall Cognitive: The cognitive biases can be remembered with the following mnemonic device: Con-Con-Con-Rep-Hind + FAMA (think Fama and French). Emotional: The emotional biases can be remembered with the following mnemonic device: LESSOR (the owner of…
Stress Testing Banks
After completing this reading, you should be able to: Describe the historical evolution of the stress testing process and compare methodologies of historical EBA, CCAR, and SCAP stress tests. Explain challenges in designing stress test scenarios, including the problem of…
Applying Duration, Convexity, and DV01
p> After completing this reading, you should be able to: Describe a one-factor interest rate model and identify common examples of interest rate factors. Define and compute the DV01 of a fixed-income security given a change in rates and the…
Interest Rates
After completing this reading, you should be able to: Calculate and interpret the impact of different compounding frequencies on a bond’s value. Define spot rate and compute spot rates given discount factors. Interpret the forward rate and compute forward rates…
Bond Yields and Return Calculations
After completing this reading, you should be able to: Distinguish between gross, and net realized returns and calculate the realized return for a bond over a holding period, including reinvestments. Define and interpret the spread of a bond and explain…
Study Notes for CFA® Level III – Behavioral Finance – offered by AnalystPrep
Reading 1: The Behavioral Biases of Individuals -a. Compare and contrast cognitive errors and emotional biases; -b. Discuss commonly recognized behavioral biases and their implications for financial decision making; -c. Identify and evaluate an individual’s behavioral biases; Reading 2: Behavioral…
Study Notes for CFA® Level III – Capital Market Expectations – offered by AnalystPrep
Reading 1: Capital Market Expectations – Part 1 (Framework and Macro Considerations) Los 1 a: Discuss the role of, and a framework for, capital market expectations in the portfolio management process Los 1 b: Discuss challenges in developing capital market…
Study Notes for CFA® Level III – Asset Allocation – offered by AnalystPrep
Reading 5: Overview of Asset Allocation -a. Describe elements of effective investment governance and investment governance considerations in asset allocation; -b. Describe elements of effective investment governance and investment governance considerations in asset allocation; -c. Compare the investment objectives of…
