Financial Exam Help 123

Category: Level III

  • Classical Immunization

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    by

    Bill Campbell
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    The idea of immunization is fairly straightforward: you have a known set of liabilities due at known future dates, and you want to create a portfolio that will fund those liabilities with a minimum of risk, at a reasonable price.  Two types of immunization are discussed in the CFA curriculum: classical immunization and contingent immunization. …

  • Prepaid Variable Forward (PVF)

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    by

    Bill Campbell
    in

    A prepaid variable forward (PVF) is a hybrid security that is quite useful in monetizing a concentrated position in publicly traded stock.  In essence, a PVF is a combination of an equity collar and a loan.  A simple example will make it clear how a PVF works, and how it can be used to monetize…

  • More Currency Exchange Rate Stuff

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    by

    Bill Campbell
    in

    I came across some topics in currency exchange at Level III that seemed to be vexing some candidates, so I thought that it warranted an article.  This will be a catch-all: anything on currency exchange at Level III across which I stumble I’ll include here. Domestic Currency Return vs. Local Currency Return Suppose that your…

  • Box Spread

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    Bill Campbell
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    If you haven’t read the article on option strategies in general, that’s a good place to start, then return here. In particular, if you haven’t read the warning about calculating profit that appears at the end of that article, you should go read it now; the way I’m calculating the profit here is correct, but…

  • Strangle

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    by

    Bill Campbell
    in ,

    If you haven’t read the article on option strategies in general, that’s a good place to start, then return here. In particular, if you haven’t read the warning about calculating profit that appears at the end of that article, you should go read it now; the way I’m calculating the profit here is correct, but…

  • Straddle

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    by

    Bill Campbell
    in ,

    If you haven’t read the article on option strategies in general, that’s a good place to start, then return here. In particular, if you haven’t read the warning about calculating profit that appears at the end of that article, you should go read it now; the way I’m calculating the profit here is correct, but…

  • (Equity) Collar

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    by

    Bill Campbell
    in ,

    If you haven’t read the article on option strategies in general, that’s a good place to start, then return here. In particular, if you haven’t read the warning about calculating profit that appears at the end of that article, you should go read it now; the way I’m calculating the profit here is correct, but…

  • Butterfly Spread

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    by

    Bill Campbell
    in ,

    If you haven’t read the article on option strategies in general, that’s a good place to start, then return here. In particular, if you haven’t read the warning about calculating profit that appears at the end of that article, you should go read it now; the way I’m calculating the profit here is correct, but…

  • Bull Spread

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    by

    Bill Campbell
    in ,

    If you haven’t read the article on option strategies in general, that’s a good place to start, then return here. In particular, if you haven’t read the warning about calculating profit that appears at the end of that article, you should go read it now; the way I’m calculating the profit here is correct, but…

  • Option-Adjusted Spread (OAS)

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    by

    Bill Campbell
    in ,

    Option-adjusted spread (OAS) is a yield spread (i.e., an interest rate) that is added to the (1-period forward) interest rate at each node in a binomial tree; specifically, it is the spread that when added to the discount rates results in the tree giving the current market price for a particular bond, after accounting for…