Q1. When the investors are afraid why would they buy OTM puts, why not ITM puts to be safer? This was a doubt when I read the same in the reading but ignored back then. Please help by elaborating on this a bit. Q2. "Call buying prevents PCP arbitrage", what does this mean?
Q1. When the investors are afraid why would they buy OTM puts, why not ITM puts to be safer? This was a doubt
when I read the same in the reading but ignored back then. Please help by elaborating on this a bit.
Q2. “Call buying prevents PCP arbitrage”, what does this mean?
Right, according to the year 1 values it does appear to be undervalyed but if we use the year 2 or 3 values and compute the price in the same manner then it appears to be overvalued. So how does one reach a conclusion.
Right, according to the year 1 values it does appear to be undervalyed but if we use the year 2 or 3 values and compute the price in the same manner then it appears to be overvalued. So how does one reach a conclusion.
If such a question comes up where discount rate is not given then we'll have to use this method. And so there we'll have to calculate the PD too in the manner as they have calculated?
If such a question comes up where discount rate is not given then we’ll have to use this method. And so there we’ll have to calculate the PD too in the manner as they have calculated?
(Sorry for the late reply, I didn't get a notification about my doubt being answered, just saw the same.) Just wanted to confirm that for the beginning value of assets and liabilities we have used beginning level of price index i.e. 100 and for the change (decline/increase) we use the average levelRead more
(Sorry for the late reply, I didn’t get a notification about my doubt being answered, just saw the same.) Just wanted to confirm that for the beginning value of assets and liabilities we have used beginning level of price index i.e. 100 and for the change (decline/increase) we use the average level of price index i.e. 125, and deduct the two from the ending level of price index i.e. 200, Is my interpretation correct?
Thanks for the vivid explanation. I've got the gist of the theory, just one doubt, so this means that LET would work only on longer term bonds i.e. a longer investment horizon, generally >= 10 years
Thanks for the vivid explanation. I’ve got the gist of the theory, just one doubt, so this means that LET would work only on longer term bonds i.e. a longer investment horizon, generally >= 10 years
Portfolio mgmt
Fra
Thanks sir. While reading the question earlier I was not thinking on correct lines therefore got confused. It's pretty clear now
Thanks sir. While reading the question earlier I was not thinking on correct lines therefore got confused. It’s pretty clear now
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Q1. When the investors are afraid why would they buy OTM puts, why not ITM puts to be safer? This was a doubt when I read the same in the reading but ignored back then. Please help by elaborating on this a bit. Q2. "Call buying prevents PCP arbitrage", what does this mean?
Q1. When the investors are afraid why would they buy OTM puts, why not ITM puts to be safer? This was a doubt
See lesswhen I read the same in the reading but ignored back then. Please help by elaborating on this a bit.
Q2. “Call buying prevents PCP arbitrage”, what does this mean?
alternative invstments
Right, according to the year 1 values it does appear to be undervalyed but if we use the year 2 or 3 values and compute the price in the same manner then it appears to be overvalued. So how does one reach a conclusion.
Right, according to the year 1 values it does appear to be undervalyed but if we use the year 2 or 3 values and compute the price in the same manner then it appears to be overvalued. So how does one reach a conclusion.
See lessCFA Level 2 Fixed Income
If such a question comes up where discount rate is not given then we'll have to use this method. And so there we'll have to calculate the PD too in the manner as they have calculated?
If such a question comes up where discount rate is not given then we’ll have to use this method. And so there we’ll have to calculate the PD too in the manner as they have calculated?
See lessMultinational Operations
(Sorry for the late reply, I didn't get a notification about my doubt being answered, just saw the same.) Just wanted to confirm that for the beginning value of assets and liabilities we have used beginning level of price index i.e. 100 and for the change (decline/increase) we use the average levelRead more
(Sorry for the late reply, I didn’t get a notification about my doubt being answered, just saw the same.) Just wanted to confirm that for the beginning value of assets and liabilities we have used beginning level of price index i.e. 100 and for the change (decline/increase) we use the average level of price index i.e. 125, and deduct the two from the ending level of price index i.e. 200, Is my interpretation correct?
Thanks for helping me with the query.
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That is what I understood from the question, and as you correctly pointed that is the rrason why comment 2 should be incorrect.
That is what I understood from the question, and as you correctly pointed that is the rrason why comment 2 should be incorrect.
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I have inserted the question. Please check.
I have inserted the question. Please check.
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Thanks for the vivid explanation. I've got the gist of the theory, just one doubt, so this means that LET would work only on longer term bonds i.e. a longer investment horizon, generally >= 10 years
Thanks for the vivid explanation. I’ve got the gist of the theory, just one doubt, so this means that LET would work only on longer term bonds i.e. a longer investment horizon, generally >= 10 years
See lessCFA EXAM
Thanks for the help👍
Thanks for the help👍
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