David,
This is not a "how to" question related to IR swap. More of an exam strategy thing.
Having gone through valuing a IR or currency swap via the bond methodology and the FRA methodology, it seems like the bond route is "faster" to compute -- certainly in a timed exam setting. (The FRA approach requires computing the forward rate(s) and then computing a semi-annual rate(s)....)
Since the two methodologies achieve the same end and since the FRA approach requires all the data needed by the bond methodology, is it safe to just master the bond approach -- strictly from an exam pragmatics view....
Do you see any reason why FRM would justifiably insist on computing the swap value via the FRA method? What's the wisdom on this from prior FRM exams?
--sridhar
This is not a "how to" question related to IR swap. More of an exam strategy thing.
Having gone through valuing a IR or currency swap via the bond methodology and the FRA methodology, it seems like the bond route is "faster" to compute -- certainly in a timed exam setting. (The FRA approach requires computing the forward rate(s) and then computing a semi-annual rate(s)....)
Since the two methodologies achieve the same end and since the FRA approach requires all the data needed by the bond methodology, is it safe to just master the bond approach -- strictly from an exam pragmatics view....
Do you see any reason why FRM would justifiably insist on computing the swap value via the FRA method? What's the wisdom on this from prior FRM exams?
--sridhar