Week in Financial Education (June 14, 2021)

Subcribe to the Bionic Turtle Blog

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

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

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

Curated Links (items you might like)

1. RISK, REGULATION, AND BANKING

BCBS on prudential treatment of cryptoasset exposures https://www.bis.org/press/p210610.htm
Assessing the Safety of Central Counterparties (Office of Financial Research) https://trtl.bz/3gu82hS Figure 1 is CCP default waterfall
Where is IFRS 9 taking the cost of funding of banks? https://trtl.bz/3zhMRrU

Impact on P&L account and the balance sheet

A Standard for Risk Data (ISDA) https://www.isda.org/2021/06/09/a-standard-for-risk-data/
Assessing and addressing technology risk (Norman Marks) https://trtl.bz/3gusAqr “Understand the strategic plans and initiatives of the enterprise and then consider how technology is and will be used.”
LJM Fund Managers Face CFTC, SEC Charges; Chief Risk Officer Settles (GARP) https://trtl.bz/3vjSt1F[/U]

2. DATA, TECH, CYBER, AND DEFI

Blockchain and DeFI: Drivers of Change in Asset Management (notes from CFA’s Alpha Summit) https://trtl.bz/3wlTNmb
A survey into data governance tools (datacamp) https://trtl.bz/3cCwaxy
Decentralized Finance: (DeFi) Policy-Maker Toolkit https://trtl.bz/3gsDZHy

- Principles for Board Governance of Cyber Risk https://trtl.bz/3xkr8Os
- FinTech 3.0 Re-Architecting Financial Market Infrastructure & DeFi https://trtl.bz/3xj4WnD
- Survey on AI existential risk scenarios (LessWrong) https://trtl.bz/3cFwyeL

3. ESG

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

The Next Frontier of Sustainable Investing (notes from CFA’s Alpha Summit) https://trtl.bz/3zk4gAt
BOE’s financial risks from climate change (under three scenarios) https://trtl.bz/3gxrTNi

4. INVESTING & FINANCE

The Rise of SPACs: IPO Disruptors or Blank Check Distortions? Aswath Damodaran) https://trtl.bz/35hocGd
Director’s Guide to Shareholder Activism https://trtl.bz/3cBNFhO
A visual explanation to short squeeze (FluentInFinance is reddit’s best finance subreddit) https://trtl.bz/2Sw2DPs

Should you be a short seller? https://www.alphaletter.co/p/should-you-be-a-short-seller
Why Interest Rates Have to Stay Low For a Very Long Time (Ben Carlson) https://trtl.bz/3xkBoGa
Still Using Book to Market for a Value Metric? https://trtl.bz/2SuYwmJ
Reinventing the Financial System (Marc Rubinstein) https://trtl.bz/2TvW8Ms Links to: BOE’s New forms of digital money https://www.bankofengland.co.uk/paper/2021/new-forms-of-digital-money

5. MATH

Three simple things about regression that every data scientist should know https://trtl.bz/3pRnby7
How Inevitable Is the Concept of Numbers? (by the incomparable Stephen Wolfram) https://trtl.bz/2TwnPoM

6. LEARNING

Coursera Global Skills Report 2021 https://trtl.bz/35kVvYU (pdf here)
7 Science-Backed Insights to Boost Your Meta-Learning (from Dr. Oakley’s online course which I have myself taken and I loved it) https://trtl.bz/3pT6YbQ

7. Other

Negotiating Ransoms: When to Play and When to Fold https://trtl.bz/3gsEqSc interview with CEO of https://www.coveware.com/
Visualizing Decentralization https://davidphelps.substack.com/p/visualizing-decentralization

Recent Posts

Week in Financial Education (May 17, 2021)

Welcome to another Week in Financial Education! This week saw some great questions and fascinating insights. I will just highlight the instructive example of a...

Week in Financial Education (May 10, 2021)

Welcome to the latest week in financial education (WIFE)! As the May exams have started, we experienced another busy week. We are grateful for some...

Week in Financial Education (May 3, 2021)

Hello, welcome to another WIFE! Our FRM forum was super busy last week. I wrote a long reply to the question (link below) about the...

What Your Colleagues Are Saying

I took the exam in Sydney and had a similar feeling about the exam being more qualitative (but no less rigorous). However, I felt I was better prepared thanks to the BT's relentless focus on throwing real life examples and methods.

Jagan G.

I subscribed to BT for my Part 1 FRM exam and just wanted to say thanks for the depth and breadth of the study materials and practice questions. I found out that I scored in the top quartile of every topic and I absolutely could not have done this without using BT - I spent many, many hours going over the practice questions and answers! I wanted to express my appreciation and gratitude to your team for your hard work in creating these materials. Thanks!

Shu C.

The BT scripts, practice questions, global topic drills and mock exams were a great help in understanding the concepts (which I could already apply on the job!) and where structured in such a manner that the breadth and depth where optimal for exam preparation - clearly the exam would have been a catastrophe without BT!

Ivan J.

Passed first time. Happy all the hard work paid off. BT was the right choice. Thanks David and Nicole for your work and commitment.

John D.

Passed! 1,4,1,2,1,4! Thank you David and Nicole for your efforts! Thank you BT! Couldn't have done it otherwise. I'm a mechanical engineer who had a career in petroleum services, then I decided to switch career to financial risk management. Passed part 1 from the first time with top quartiles and passed part 2 from the first time as well. All with BT! BT is always the recommendation I give to people aiming at the FRM designation! Thank you again!

Feras S.

Passed Part I and Part II first time - absolutely could not have done it without BT. Like a few others I didn't even both buying the GARP books for Part II and went solely with BT materials. Just read, answered questions, watched videos, read, more questions, and... more questions! All the practice question taking looked to pay off. Thanks again Bionic Turtle for a great curriculum. Keep up the fantastic work!

John D.