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Exam Feedback November 2016 Part 2 Exam Feedback

Johnkrause1

Member
Subscriber
It asked to calcuate a 2 year zero but we were only given one year spot and forward rates with 50/50 one year from now so I figured we had to calculate the two year spot from thos rates using 3.5 and 3 (half of 2.75, 3.25). I'm I nuts????

It did give me answer A i think. UGH

Think the following formula was relevant for this (1+s2)^2=(1+s1)(1+f1,1) but it wouldn't give me any of the answers
 
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Longpips

New Member
I agree but why does GARP expect us to MASTER the material simply by reading their selected ambiguous readings that have virtually NO practice questions or straightforward examples throughout......

CFA DOES THIS 100% more clearly.


My feeling is GARP simply provides the topics and reading materials. They do not want to "spoon feed" the candidates. It is up to the candidates to master the material on their own. I think that is the appropriate approach.

Like what I mentioned, if a "professional exam" simply recycles test questions from a test bank, it becomes too easy and the certification loses value. All the candidate has to do is spend enormous amount of time memorizing, regurgitating, etc all available past examples. It becomes mechanical. It doesn't test problem solving skills, intelligence and real quantitative and critical thinking skills.

But if a test contains new, tricky, multi-level and multi disciplinary questions, it raises the bar further and tests candidates real problem solving skills. I think that's what differentiates this exam from other exams.

Personally, I hope GARP continues in this path. This guarantees that FRM holders have mastery of the subject matter PLUS excellent problem-solving skills.
 

emilioalzamora1

Well-Known Member
the Total Return Swap answer was for sure nonsense as they mixed up the appreciation/depreciation of buyer/seller.
I chose the answer with the Credit-Linked Note.
 

Eternity

Member
the Total Return Swap answer was for sure nonsense as they mixed up the appreciation/depreciation of buyer/seller.
I chose the answer with the Credit-Linked Note.
I chose first to default put. When the correlation is high, one default results in all default, hence the buyer may request higher premium which covers all potential losses. Correct me if I am wrong.
 

CAN

New Member
I chose first to default put. When the correlation is high, one default results in all default, hence the buyer may request higher premium which covers all potential losses. Correct me if I am wrong.

Unfortunately, First to default put is wrong..:confused:
Default correlation plays an important role in a basket CDS.
If the reference assets are perfectly correlated, the payoff of the first to default put will be the same as the nth to default put.

When correlation is low, The payoff to junior tranche investors will be higher than senior tranches.
Thus, When First to Default Put correlation low, premium is high.
With low correlation between assets, there is a likely chance that 1 to 5 defaults will occur out of 100 assets.

There are some First to default put questions in BT and Schweser.


CLN seller has no counterparty risk and no credit risk. but CLN buyer has counterparty risk.

I think CLN seller ~ cannot ~ ...is correct.

If there is no credit event by the reference entity, the investor receives back the principal investment plus coupon.
If there is credit event by the reference entity the investor receives a bond issued by the reference entity

The investor will have experienced a loss as a result of the credit event because the delivered bond will be worth less than the original sum invested.
 
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SoSo0921

New Member
It’s just not gonna happen.
2015 Nov FRM exam results was out by 5 Jan.
2016 May FRM exam results was out by 28 Jun.

I chose Credit Linked Note too.
It was sooooooo tricky.
 
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emilioalzamora1

Well-Known Member
I am not sure about the CLN myself, I devoted quite a while to this one during the exam. Following the CAIA curriculum I have my doubts that the CLN answer with the collateral is correct (even if I chose it in the end). What's for sure: TRS is wrong.
 
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