cfa level 1 formulas exam questions with correct a
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CFA Level 1 Formulas Exam Questions
with Correct Answers
Price change based on convexity - Answer--duration(change in yield)+1/2(convexity)
(change in yield)^2
Effective Duration - Answer-Required if a bond has embedded options:
[(v-)-(v+)]/[2V0(change in curve)]
Modified Duration - Answer-[(v-)-(v+)]/[2V0(change in yield)]
Future Value - Answer-PV(1+(I/Y)^N)
PV - Answer-FV/(1+r)^n
PV of perpetuity - Answer-PMT / discount rate
Approximate percentage price change of a bond - Answer-(-)(modified duration)(ΔYTM)
Baye's formula - Answer-P(new info) / unconditional probability of new info*prior prob of
event
Combination binomial - Answer-nCr - order doesn't matter
Permutation binomial - Answer-nPr - order matters
Binomial probability - Answer-nCx * p^x * (1-p)^(n-x)
Binomial Expected value - Answer-nP
Binomial variance - Answer-np(1-p)
90% confidence interval - Answer-+/- 1.645 SDs
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