Why they are choosing bond A ? Both Bond A and Bond B has nearly same Macaulay duration but bond B has very low convexity as compared to that of bond A. Please refer the market portion and Exhibit 1.
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Why they are not using the delta and the gamma column in their calculations ? (Please refer question 39)
How come they got 6.5% in their solution as pre tax return, as per my calculations one should get 6.5% as post tax return ? Plz refer part C of the question.
Roll down Return is the %Change in the price of the bond assuming an unchanged yield curve. How come 1st line of the answer is saying “same yield to maturity”. Please also explain how can zero coupon bond trade at a premium.
Please explain the meaning of standard fees and breakeven active return ? When gross active return is 1.25%, I am getting (the answer of core is different) Billed fees= ((1.25-0.2)*0.25+ 0.2)=0.4625% Net active return=(1.25-0.4625)=0.7875%.
Please explain the marked portion in the picture.(both the photos contain the disadvantages of leading indicator based approach)
Please explain point (4) in the picture. Please explain the underlined part. Specifically (I am not able to understand the difference between representation of past performance and the linking of the two performance).
As arrival price is not known so we cannot calculate delay cost and trading cost ? Which one will me decision price $79.9 or $79.6 ? And how we will adjust the difference in the calculation? How come Opportunity cost is $8000 ...
Incentive fees reduces the volatility of the return but management fees does not.- Why ? Although management fees is a fixed percentage of AUM but if the profit is changing year on year so AUM is changing and so the management ...
1. In case of inefficient markets both type 1error and type 2 error are costly and type 1 error is more costly than type 2 error. 2. In case of efficient markets both type 1 and type 2 error are less ...