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Hi, maybe an odd question, I realise that the FRM is assigned weightings ie 20% to topic 1, 20% to topic 2 , 30% to topic 3 etc..does this mean that there will be 20 questions assigned to topics 1 & 2 and 30 questions assigned to topics 3 & 4 and that each question is worth 1 point each? Or does...

Hi David, I have a question re the headed question. I have copied the answer below but I have the following questions re the solution: "We can value this swap as two bonds (see upper panel below). Although it might be easier to recognize that the exchange...

There is a section within the GARP notes on page 6 of the Quantitative Analysis book that discusses Conditional Independence and I hope that someone may be able to explain this concept is simpler terms that what is shown in the notes. Particularly this section..."Note that two types of...

Hi, There is a quote in the Kaplan materials that I hope someone can clarify for, the context isa discussion of the CML and point of tangency with the market frontier: "At any point to the left of M, investors are lending at the risk-free rate because some of their money is invested in...

Hi David, I have a question concerning the example that appears in the Hull reading on page 287, Figure 13.10. I have attached a screenshot. I am able to calculate the size of an up move factor, and down move factor as 1.35, .741 respectively, and the risk neutral probabilities of both up and...

Hi, I have a question concerning the treatment of continuous dividends vs discrete dividends within the BSM option pricing model. For continuous dividends, they will accounted for within the call formula as So * e-qt.....and conversely with the put formula as well. However with discrete...

Hi, I have currently completing some practice exams provided by Kaplan Schweser, and one of the questions states, ..."Note that on the exam, you will not have access to z-tables, so you would have to reason this one out using the normal distribution approximations"...I was of the understanding...

Hi David, I have a question concerning an old video on YT concerning the Bayes Theory. The YT link is here, , my question concerns how you have arrived at the values in the formula, specifically the values in the denominator of P(U). In the formula, you have: P(G/U) = P(U/G) * P(G) / P(U)...

Hi, I hope that someone can assist with the below question that is in the GARP Notes: 14.11 A stock price is currently 40. It is known that it will be 42 or 38 at the end of a month. The risk-free rate is 4% per annum with continuous compounding. What is the value of a one-month call option...

Hi, re the LO 13, I am seeking some clarification on the terminology that is used. My understanding (which could be wrong btw) is that the risk that is being considered here is that of curve risk, ie as Tuckman points out.."the risk that rates along the term structure move by different...

David, I have a question more for my syllabus understanding than really anything else. In your "Chapter 5. Modern Portfolio Theory (MPT) and the Capital Asset Pricing Model (CAPM)" sample notes, under the heading "Key Ideas in MPT and CAPM", you discuss For the exam be prepared to solve for the...

I'm hoping that someone can explain this to me as to me it sounds very counter intuitive..."To understand these results, note that the yield to maturity is a complicated function of the spot rates applicable to each payment date. As the coupon increases, the average time until the bond holder...

Maybe playing devils advocate on this but surely GARP are considering that the May exam dates are at risk when considering the Coronavirus. Has anybody heard anything from GARP at all on this?

I understand that the reasons for the existence of IRS comes down to two counterparties with one counterparty having a comparative advantage in the fixed vs floating markets versus another counterparty. However, what isnt clear to me is that how can one counterparty have an advantage in say the...

All, I hope that someone can shed some light on the following issue that has me slightly confused. After reading a number of the LO ,not just for QA but the other Part 1 topics as well, I see terms like 1. Describe 2. Define, 3. Explain, 4, Characterise, 5. Interpret, 6. Construct and 7...