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Week in Financial Education (June 14, 2021)

Welcome to another WIFE. Last week we added a new practice question (PQ) set for the Insurance chapter (P1.FMP-2) and a new PQ set for the Risk Monitoring chapter (P2.IM-7). Trying to be realistic, for the mortality table, I pulled actual projected 2021 period life tables from the Social Security Administration at https://www.ssa.gov/. We received some truly thought-provoking questions last week. e.g. why would you use a stop-limit? Is put-call parity related to BSM? Thank you especially to lushukai for a lengthy, valuable response and to bollengc for identifying several errors and typos. Very much appreciated!

New Practice Questions

1. P1.T3.21.3. Insurance companies https://trtl.bz/3wnh3Qu

Morality Table

2. P2.T9.21.9. Risk monitoring https://trtl.bz/2Tsch5A

Forum News

1. [P1.T1] GARP’s mistake has been often repeated but “EC= UL- EL” is incorrect (UL- EL is not meaningful) https://trtl.bz/3wl06X1

2. [P1.T2] Every FRM candidate must understand the quantile function https://trtl.bz/3pOZYMR

Forum Response

3. [P1.T2] Quantifying the error when there is omitted variable bias https://trtl.bz/3vmhVUn

4. [P1.T2] Is a seasonal differenced series MA(1)? https://trtl.bz/3gk7ZGq

5. [P1.T3] What’s the point of a stop-limit? https://trtl.bz/3pSrWrk

6. [P1.T3] Is put-call parity related to BSM? https://trtl.bz/3gicW2v

7. [P1.T4] Are ESOs dilutive? https://trtl.bz/3vfnTX7

8. [P1.T4] Thank you lushukai for the excellent response to math application of the Taylor Series (delta-gamma) https://trtl.bz/35gNXX7

9. [P1.T4] Thank you bollengc for binomial https://trtl.bz/3gjfr4M and ex-post/ex-ante https://trtl.bz/3vllytI

10. [P2.T7] When did Basel II come into force in the EU? https://trtl.bz/3pMX23o

Forum Response

Curated Links (items you might like)

1. RISK, REGULATION, AND BANKING

Impact on P&L account and the balance sheet

2. DATA, TECH, CYBER, AND DEFI

DeFi Service model

3. ESG

  • A Framework to Drive ESG Financial Discipline https://trtl.bz/2Sq2j4S “ESG isn’t non-financial information, but rather pre-financial information.”
Investment model

4. INVESTING & FINANCE

Price and Demand Model
Commercial Banking Model

5. MATH

Math Model

6. LEARNING

7. Other

Pluralistic model

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