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Episode #14, Investment B, part 2 (page 74)
 
You are here: Forum Home  >  Forums  >  2008 FRM Errata  >  Thread
David Harper, CFA, FRM, CIPM
Posted: 18 October 2008 09:15 AM   [ Ignore ]  
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Under the topic of market-neutral pair trading:

page 74 says:

“[Pair trade] Takes a long position in the ―over-valued stock (e.g., Coke) and a short position in the undervalued stock (e.g., Pepsi).” which is incorrectly reversed

The pair trade takes a long position in the undervalued stock and a short position in the overvalued stock.

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‹‹ Episode #11 - Ops B - page 62      Formula Sheet ››

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