Vol3 Cap market P111 why, situation, difference, experience

John10

P111 Q2.A, why answer choose status quos trap? it should choose anchoring trap right?
also both status quos and recallability trap are using past experience to forcast today's situation, so what's the difference between recallability trap, status quos and anchoring?

P111 Q3, for 10 year MBS, we should use 1.2+2.6+1+0.95, but the answer is using 1.2+2.6+0.95, why? why we miss the spread of 10 year t-bond and 1 year treasury?

p121, Q7A for output gap, can inflation is increasing?

P127,Q15, when economic grow, why bond yield increase, we can have the situation economic grow and interest rate low or flat, isn't it?

P181, Q11, it says tfp is not directly observable, but in P184, Q11, it says total productivity is not directly observable, my opinion: tfp is observable, total productivity is
not directly observable, do you agree?

p181, Q12, it says when correlation between US and world equity market increase,required return increase, I don't agree, first,why risk increase when correlation increase? secondaly, when risk increase,why required return increase, we can have high risk, low return, right?

p181, Q16, it says we should use bottom up, but I think bottom up only study individual security, not the market turning point, it is under top-down, right?

p182, Q1C, it says fed model limitation is compare norminal and real, so what is norminal? E/P of stock market or T-bond yield? I think both are real, how about you?

bkballa

francisgy Wrote:
------------------------------------------------------->
> p182, Q1C, it says fed model limitation is compare
> norminal and real, so what is norminal? E/P of
> stock market or T-bond yield? I think both are
> real, how about you?


Im real

infinitybenzo

p182, Q1C, it says fed model limitation is compare norminal and real, so what is norminal? E/P of stock market or T-bond yield? I think both are real, how about you?

francis , do you understand what "real" means ? It does not mean someone made it up.

It just means its not adjusted for inflation. When you get an S&P yield it is a ratio of two co-temporal terms i.e. earnings and index level so inflation does not figure into it ( numerator and denominator effects cancel), i.e. it is real.

But T-note yield does not take into account the inflation effect , it is nominal

skycfa

francis,

"
p181, Q16, it says we should use bottom up, but I think bottom up only study individual security, not the market turning point, it is under top-down, right? "


Q has two parts:

For turning point : macro, so top down
For tracking error : individual security characteristics versus benchmark requirement, so bottom up

i.e. combo needed

lcai

francis:

"p181, Q12, it says when correlation between US and world equity market increase,required return increase, I don't agree, first,why risk increase when correlation increase? secondaly, when risk increase,why required return increase, we can have high risk, low return, right? "

Risk as measured using variance goes up since it has a term 2*correlation*sigma1*sigma2 ( sigma's are the two stdevs) . So if correlation goes up risk goes up .

All things equal , higher risk would mean lower risk adjusted return , so for same risk adjusted return , higher risk demands higher return.