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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 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

Morality Table

2. P2.T9.21.9. Risk monitoring

Forum News

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

2. [P1.T2] Every FRM candidate must understand the quantile function

Forum Response

3. [P1.T2] Quantifying the error when there is omitted variable bias

4. [P1.T2] Is a seasonal differenced series MA(1)?

5. [P1.T3] What’s the point of a stop-limit?

6. [P1.T3] Is put-call parity related to BSM?

7. [P1.T4] Are ESOs dilutive?

8. [P1.T4] Thank you lushukai for the excellent response to math application of the Taylor Series (delta-gamma)

9. [P1.T4] Thank you bollengc for binomial and ex-post/ex-ante

10. [P2.T7] When did Basel II come into force in the EU?

Forum Response

Curated Links (items you might like)


Impact on P&L account and the balance sheet


DeFi Service model

3. ESG

  • A Framework to Drive ESG Financial Discipline “ESG isn’t non-financial information, but rather pre-financial information.”
Investment model


Price and Demand Model
Commercial Banking Model


Math Model


7. Other

Pluralistic model

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