Actual vs Approximation for IRP asking, anybody, Foreign, all, why

BC_MBA_student

Does anybody know, when and why anybody (really, I'm just asking about CFAI exam) would ever want to use the approximate formulas sprinkled all over Reading 19 (Foreign Exchange Parity Relations)?

economicz

That makes sense.

It'd be super evil, if they put the exact math answer, and the approximate math answer, as two choices.

Thanks.

bdavi77962

Yea because the difference between the two will not be significant enough to impact your answer...

Chances are the question will be more theoretical than computational. They might ask us to compare the IRP between 2-3 countries and see if it holds or not, for which you can simply do the approximation and see if the differences are the same.

Rasec

So, *always* use them (on the exam)?

tianxin

They are faster and do a good enough job to explain/interpret/answer the problem