CFA Exam

[west]

Test day is coming up soon!  Who all's planning on taking one of the exams?  And how's the studying doing? :D

[Shawn]

I'm writing my level 1 in December, this would be my second time writing it. I failed it the first time but I was congested with work & school (bit off more than I could chew at the time). Level 1 is not very hard, most of it is 1st to 2nd year finance, economics, business courses.

 

Are you writing yours in June ? If so I wish you the best of luck brother.

[TwoCitiesCapital]

Level 3 candidate here. Good luck to you guys. Tou

[Palantir]

L3 candidate....not looking forward to this puppy.

[Phaceliacapital]

L2: Fuck Ethics :D

[JBird]

A question for the CFA candidates: Does the CFA body of knowledge suggest that price volatility is a measure of risk?

[Green King]

Hey :D that's the party line.

[Hielko]

A question for the CFA candidates: Does the CFA body of knowledge suggest that price volatility is a measure of risk?

It's certainly a measure of risk, it's hard to argue that volatility is irrelevant, but don't think the body of knowledge suggest that it is the only measure of risk.

[Palantir]

A question for the CFA candidates: Does the CFA body of knowledge suggest that price volatility is a measure of risk?

 

What other notion of market risk is there? It's pretty standard that risk is defined as a dispersion of returns.

[bmichaud]

A question for the CFA candidates: Does the CFA body of knowledge suggest that price volatility is a measure of risk?

 

Of course it does - how else is academia supposed to "teach" risk management? While the CFA program is a phenomenal experience and challenge, and is a good barometer for aptitude and work ethic, it pales in comparison to A) real world experience of running your own dough as well as OPM, and B) the education available right here on this board.

 

Best of luck to those sitting this spring!

[NormR]

A question for the CFA candidates: Does the CFA body of knowledge suggest that price volatility is a measure of risk?

 

What other notion of market risk is there? It's pretty standard that risk is defined as a dispersion of returns.

 

Various factor based approaches where beta, size, book/price, momentum, etc all become risk measures.  The interpretation is largely a bunch of poppycock but not uncommon  in academia.

 

Also, there are other measures like volatility.  Semi-variance, etc.  And combos like the Sharpe ratio.

 

 

Good luck / skill to everyone on the exam this year.  I'm glad I don't have to write exams these days.  ;D

[Palantir]

^Yeah but those measures are all based on the use of standard deviation as a measure of risk. Sharpe ratio, beta, semideviation, shortfall risk etc etc. Now in some cases they use nonnormal distributions as a measure, but it's still underpinned by a form of return volatility.

[Hielko]

^Yeah but those measures are all based on the use of standard deviation as a measure of risk. Sharpe ratio, beta, semideviation, shortfall risk etc etc. Now in some cases they use nonnormal distributions as a measure, but it's still underpinned by a form of return volatility.

Yes, but there is a wide gap between taking historical variance as your risk measure, what I think birdman was implying, or recognizing that risk is determined by a general form of return volatility. I'd say risk is determined by a distribution that is not directly observable ex-ante. Hard to argue with that, but also hard to do anything practical with it.

[NormR]

^Yeah but those measures are all based on the use of standard deviation as a measure of risk. Sharpe ratio, beta, semideviation, shortfall risk etc etc. Now in some cases they use nonnormal distributions as a measure, but it's still underpinned by a form of return volatility.

 

While I'm sympathetic with what you're trying to say, it's a bit of an overstatement, at least mathematically speaking.  On the other hand, volatility has become a rather mushy word with many meanings.     

[west]

Good luck guys!

[twacowfca]

A question for the CFA candidates: Does the CFA body of knowledge suggest that price volatility is a measure of risk?

 

What other notion of market risk is there? It's pretty standard that risk is defined as a dispersion of returns.

 

Various factor based approaches where beta, size, book/price, momentum, etc all become risk measures.  The interpretation is largely a bunch of poppycock but not uncommon  in academia.

 

Also, there are other measures like volatility.  Semi-variance, etc.  And combos like the Sharpe ratio.

 

 

Good luck / skill to everyone on the exam this year.  I'm glad I don't have to write exams these days.  ;D

 

Norm, would it be heresy to shift focus on the CFA exam to concepts like Ziemba's modified Sharpe ratio that is more representative of down risk/volatity than a ratio based on a normal distribution?

[NormR]

Norm, would it be heresy to shift focus on the CFA exam to concepts like Ziemba's modified Sharpe ratio that is more representative of down risk/volatity than a ratio based on a normal distribution?

 

Humm, I may have left the wrong impression.  I think it's perfectly ok for the CFA to teach, shall we say, standard theory first and then add to it later on.  IIRC, the level 3 exam had a section on some of the more advanced performance metrics, but it's been some time since I wrote it.

 

On the other hand, I suspect that most value investors don't pay much attention to volatility as a risk factor.  If anything, they may look for low volatility stocks which seem to do quite well over the long term. 

[Phaceliacapital]

Good luck guys, we'll need it :)

[Sunrider]

I was about to say Good Luck. But I don't think you need it - you just need to know your stuff.

 

Fortunately I did mine many many moons ago and from what I can tell standards have evidently slipped, so really, try to not think of it as luck. Just do your studying ;-)

 

And to whomever commented derogatorily on Ethics - all I can say is that if you're dumb enough to fail that then you really do have issues and perhaps you should find something better to do with your time.

 

C.

[VAL9000]

I was about to say Good Luck. But I don't think you need it - you just need to know your stuff.

 

Fortunately I did mine many many moons ago and from what I can tell standards have evidently slipped, so really, try to not think of it as luck. Just do your studying ;-)

 

And to whomever commented derogatorily on Ethics - all I can say is that if you're dumb enough to fail that then you really do have issues and perhaps you should find something better to do with your time.

 

C.

 

I think the ethics questions were a lot easier many moons ago.  Maybe standards haven't slipped after all!

 

[NormR]

I found the ethics questions to be entertainingly tricky, but not too hard for those who read the material.  Many CFA questions have some tricks in them.  The ones that packed several questions into one and inverted the answer were lovely brain benders on a timed test.

 

Good skill/luck to all who are writing it! 

[Palantir]

Ethics is my worst section...then again, maybe that says something about me.... ;D

 

How'd all you mofos do? Level 3 was okay.......AM was ok, PM was tough dude...

[west]

Ethics is my worst section...then again, maybe that says something about me.... ;D

 

How'd all you mofos do? Level 3 was okay.......AM was ok, PM was tough dude...

 

In regards to Level 3, it was the opposite for me!  I hate that written stuff.  It's so easy to make a dumb mistake.  Hopefully, they'll grade it leniently...

 

I guess we'll see in August!

[Phaceliacapital]

Ethics L2 my god shoot me

[Hielko]

Ethics L2 my god shoot me

Yeah, I fully expect to score the worst on the ethics questions... It's not that finding the most ethical/safest course of action is hard, but often the less ethical option is also allowed.