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Hi Hend Thanks for taking the time to respond during holidays. The statement seems to mean P=C. Shouldn't it be P=C+Xe^rT-S? (Just rearranging the put call parity formula). No?

Hi Hend, Happy holidays. You're right. Typo. European option as inferred by the context. All I'm trying to say is that this statement is wrong. Do you agree? Thanks.

I'm reading a report that contains the following statement/claim: "Option pricing theory tells us that a put and a call on an asset will have the same value if the strike price and exercise dates are the same, and volatility of the asset itself is the same." My FRM/CFA knowledges tell me that...

To add to above: Frequent “adverse prior year reserve developments” is an indication of Company’s poor reserving practice. On the other hand, “favorable prior year reserve developments” indicates sound/conservative reserving practice. So I’ll look at those too. Also, if I see increasing...

Hi Marius Thanks for the illustration. I see where you’re coming from. I think either over-reserving (not efficient) or under-reserving is not good – and it is difficult to find the right balance. But in general, as an investor, I would like to see declining loan loss provisions because it is...

Thanks for all the inputs and thoughts. Great example of applying what we learned from FRM to real world situation. This is such a great forum. I wish there could be a specific session for us to discuss practical topics such as real life work related.

I am analyzing a auto financing company. Balance sheet shows that "allowances for loan losses" has been declining while "consumer loan balance" has been increasing. Is this a good thing? I think it is a good thing because "allowance for loan losses" = reserve = expected losses ~= cost of...

I also always thought paid membership is mandatory to sit for the exam. I just started the FRM program last year and you're saying that it's mandatory for the first year. This means I didn't waste any money :) I already have CFA membership (I can read CFA magazine, Financial Analyst Journal...

If you're doing CFA L3, I suggest focusing on CFA L3 first. CFA L3 seems easy (the reading material seems very easy, nothing very quantitative but a lot of qualitative stuffs such as behavioral finance, IPS, etc.) but IMO is the most difficult of the 3 levels - morning session is essay format...

Nevermind. The website also says membership is NOT a requirement to sit for the exam. Do I have to be a member of GARP to sit for the FRM Exam? No. Membership is not required to sit for the FRM Exams. However, you will be automatically provided with complimentary membership privileges as an...

I also got the letter stating that it will automatically charge me in November. You do need to be a paid member in order to sit for the exam, am I correct? If we don't pay in November, do they have the right not to grade our exams? Thanks.

LOL...a desk clock?!? This is way over. Someone can have a desk clock while I can't even have a watch. That's a preferential treatment.

I also think the proctor is not right. It is up to the person if he’s willing to lend or not. There’s no need to pressure. They can ask but if the person says no, then you can’t force and let other candidate challenge him. It is not professional. It is the other candidate’s issue for not...

I'm using my level 1 experience here. I took level 1 in May and and my feeling wasn't great at that time - i counted rhe number of questions i wasn't sure of he answers and my gut feeling told me I would score ~60%, close to the mean score I got from the practice exams I had done for L1. And...

Agreed and that's what I said in my earlier thread also. It forces me to decide which is more important? Being coherent or easy to understand? I chose coherent over easy to understand (ie I chose ES), but nobody knows the GARP answer.

Standard deviation is not coherent because it fails monotonocity. I agree this was a tricky/flawed question.

This was a tricky question. The liability>asset choice was a trap for those who didn't pay close attention (almost got me). I chose subordination as the answer because, if I remember correctly, the reading says Overcollateralization is often created through subordination, but I could be wrong.

I didn't see any clock. Only the flip board that changes every 1 hour. Hope you made it out fine.

Trabala yea I struggle on that point too. Also choice B for higher information ratio. Chose MBS-2 and YC-1 on that spread question but I'm not too sure.

I chose ES for the coherent risk measure question because it's the best answer but I specifically remember from my note that ES is NOT easy to interpret/communicate. Spectral/distorted is even hard to understand (only of academic interest) and obviously VaR and standard deviation are NOT coherent.