Quiz Total Bond return return

transferpricing

Calculate the one year expected return:

Beginning price $103, 5% semiannual coupon, expected price at the end of one year: $102.5.
Annual reinvestment rate: 2%.

Chuckrox

FinNinja Wrote:
-------------------------------------------------------
> So BEY is correct, EAR is incorrect, right?
>
> Or does this really matter to CFAI at level III?
>
> I know BEY is the way to quote, I also know that
> BEY is not the true EAR.
>
> I hate quoting conventions! I know why they did
> it, but really we have the technology now to move
> away from that. Why continue to confuse people?

Why in the fixed income section do they say "The asset swap curve is gaining minimal acceptance in the USA."

Pretty much every screen your bring up prices off ASW and TSY both and routinely spreads are quoted ASW.

I have found the Level III curriculum to be very untimely. Level II seemed like very relevant and timely information (pensions, derivatives, etc.). Level III seems behind the times.



Edited 1 time(s). Last edit at Tuesday, May 31, 2011 at 11:29AM by Paraguay.

zwjy

So BEY is correct, EAR is incorrect, right?

Or does this really matter to CFAI at level III?

I know BEY is the way to quote, I also know that BEY is not the true EAR.

I hate quoting conventions! I know why they did it, but really we have the technology now to move away from that. Why continue to confuse people?

mik82

THANKS PARAGUAY.....

BUT I FOUND IT REALLY BORING......

NakedPuts2011

vikas5871 Wrote:
-------------------------------------------------------
> 4.3 PER CENT

That's an interesting way to do it.

PalacioHill

FinNinja Wrote:
-------------------------------------------------------
> Paraguay - could you indicate the blue box you are
> refering to? I am looking at SS9 example 5 on page
> 27 of CFAI text, but I don't see a mention that
> total return should be in BEY. I know this is
> probably a small chance question, but it seems
> like easy point if I can get a clear answer on
> proper format.
>
> If this used to be a big part of the test before
> there is a chance it could show up now. It would
> be one of those curve balls from CFAI that those
> in the know could score points over those in the
> dark.

I was just talking total return analysis in general is a single blue box.

aidebaobao

Paraguay - could you indicate the blue box you are refering to? I am looking at SS9 example 5 on page 27 of CFAI text, but I don't see a mention that total return should be in BEY. I know this is probably a small chance question, but it seems like easy point if I can get a clear answer on proper format.

If this used to be a big part of the test before there is a chance it could show up now. It would be one of those curve balls from CFAI that those in the know could score points over those in the dark.

wake2000

4.345% BEY

Valores

Mr.Anderson Wrote:
-------------------------------------------------------
> I am European. We almost exclusively have annual
> coupon payments.......
>
> so but why uses Schweser in ther EOC question the
> EAR for the total return? Or does it depend on
> their wording of total "effective" return?

I guess it depends on their interpretation. Again, this used to be a very large part of the curriculum circa 2006-2007, it is one blue box now. Schweser LIII is very poor.

Analyze_This

I am European. We almost exclusively have annual coupon payments.......

so but why uses Schweser in ther EOC question the EAR for the total return? Or does it depend on their wording of total "effective" return?



Edited 1 time(s). Last edit at Tuesday, May 31, 2011 at 10:50AM by Mr.Anderson.