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All, I passed Level 1 in May and am signed up for Level 2 in November. I was a quantitative finance major with a concentration in risk management so I only used BT to study for Level 1 and felt that prepared me more than enough. I didn't buy any of the books or use any other study materials...

Does the exam expect us to know how many days are in each month when doing day counts for Accrued Interest?

Thank you David, definitely have a better understanding. I just know want to make sure I don't get tripped up on a question as simple as calculating an Information Ratio.

Ok thanks, so according to GARP Amenc's answer is incorrect on Page 43 of the PDF as IR = Alpha / Tracking Error which is equivalent to IR = Residual Return / Active Risk which I think we can all agree on is a formula that is being thrown out. So if we get a question on the exam that's asking...

Hi David, I'm confused on what is considered residual risk because in the Foundations PDF on Page 43 you refer to the Tracking Error as the Residual Risk but up above you refer to Tracking Error as Active Risk. So basically I'm wondering how do you calculate residual risk and how do you...

I believe 1.04% is correct as the sum of the three probabilities needs to equal 5% as we are dividing each by 5% to get the weighted average in the 5% tail. I'm just wondering how 1.04% is derived. The 3.92% and .04% make sense. If you take 5%- 3.92%-.04% = 1.04% but I feel there's a...

Thanks ShaktiRathore just one more question what does the "C0" represent in this formula 96.04%(2C0(.02)^0*(.98)^2)....I'm trying to figure out how this formula generates 1.04%. Thanks

Hi David, On Page 183 of the Valuation Study Guide the expected shortfall of a 2 bond portfolio with PD=2% is given by (0 defaults * 1.04% + 1 default * 3.92% + 2 defaults * 0.04%) / 5% = 0.8. Can you explain how the 1.04%, 3.92% , and 0.04% are calculated? Thank You