Bionic Turtle’s Week in Risk (ending March 26th)

We are still working hard to publish FRM materials for all of the readings in the GARP curriculum this week! Last week we published some great practice question sets from the Current Issues topic, along with some study notes throughout the study planner. David has compiled some very interesting articles this week, along with the most discussed forum threads, where our members get in-depth answers to their questions. We hope you enjoy! 🙂

New practice questions

In the forum this week (selected only) or Major News

margin requirements

solvency

Political and regulatory risk, including Systemic Risk (including BIS)

Technology, including FinTech and Cybersecurity

Cyberattacks

Natural Science, including Climate and Energy

Climate Model

Data science (primarily R), including Alternative Data

Personal finance

Retirement

Other

Enterprise risk management (ERM) including governance

human rights benchmark

Case Studies and Companies, including Strategic or Reputation risk

  • Capital Group takes on the passive investors https://www.ft.com/content/5e1df770-0d58-11e7-a88c-50ba212dce4dBut Capital’s analysis of historic fund performance — research that has been corroborated by Morningstar, an industry data provider — has shown that two factors are strong indicators of long-term, market-beating returns: fund managers having plenty of their own money in a fund; and low fees … Capital won permission from regulators this year to start selling what it calls “clean shares”, which, unlike most mutual fund share classes, do not include a distribution fee baked in. Clean shares will include only Capital’s own management fee.

capital funds

Risk Foundations (FRM P1.T1)

Terrorism deaths in united states

Quantitative Analysis (FRM P1.T2)

R correlation tutorial

Financial Markets and Products, including Interest Rates, Commodity Risk, and Foreign Exchange (FX)(FRM P1.T3)

  • Covered Interest Parity http://johnhcochrane.blogspot.com/2017/03/covered-interest-parity.htmlThe covered interest rate parity relationship fell apart in the financial crisis. And that’s understandable. To take advantage of it, you first have to … borrow dollars. Good luck with that in fall 2008. Long-only investors had more important things on their minds than some cockamaime scheme to invest abroad and use forward markets to gain a half percent per year or so on their abundant (ha!) cash balances. The amazing thing is, the arbitrage spread has not really closed down since the crisis.
  • What makes gambling wrong but insurance right? http://www.bbc.com/news/business-38905963The ability to buy derivatives lets companies specialise in a particular market. Otherwise, they would have to diversify – like the Chinese merchants four millennia ago, who didn’t want all their goods in one ship. The more an economy specialises, the more it tends to produce. But unlike regular insurance, for derivatives you don’t need to find someone with a risk they need to protect themselves against. You just need to find someone willing to take a gamble on any uncertain event anywhere in the world.” [it’s called an insurable interest]
  • Rookie Currency Traders Are Causing Big Problems https://www.bloomberg.com/news/articles/2017-03-20/rookie-currency-traders-are-causing-trouble-at-crucial-momentsTucked deep into a report on foreign-exchange market liquidity was a brief paragraph on how rookie traders could be partly to blame — along with falling volumes and the growing prevalence of electronic trading — for the flash crashes that have roiled the $5.1-trillion-a-day currency market over the past two years.

Rookie Currency traders

Valuation and Risk Models, including Country risk (FRM P1.T4)

Credit risk (FRM P1.T6)

Investment risk, including Alternative Investments and Pensions (FRM P1.T8)

Blackstone

Current issues (FRM P2.T9)

Defying the feds global liquidity

 

 

 

 

 

 

 

 

 

 

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