CFA Level 1 Formulas question and answers rated A+ 2024
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Course
CFA Level 1
Institution
CFA Level 1
CFA Level 1 Formulas question and answers rated A+ 2024Price change based on convexity - correct answer -duration(change in yield)+1/2(convexity)(change in yield)^2
Effective Duration - correct answer Required if a bond has embedded options: [(v-)-(v+)]/[2V0(change in curve)]
Modified Duratio...
CFA Level 1 Formulas question with complete solution graded A+ Already passed
Price change based on convexity - correct answer -duration(change in yield)+1/2(convexity)(change in yield)^2
Effective Duration - correct answer Required if a bond has embedded options: [(v-)-(v+)]/[2V0(change in curve)]
Modified Duration - correct answer [(v-)-(v+)]/[2V0(change in yield)]
Future Value - correct answer PV(1+(I/Y)^N)
PV - correct answer FV/(1+r)^n
PV of perpetuity - correct answer PMT / discount rate
Approximate percentage price change of a bond - correct answer (-)(modified duration)(ΔYTM)
Nominal Risk Free - correct answer Real Risk Free + expected inflation
Required Return - correct answer Nominal risk free + liquidity premiums + default risk premium + maturity risk premium
EAR - correct answer [(1+periodic rate)^N ] - 1
EAR continuous - correct answer e^r - 1 Bank discount yield - correct answer (FV - Price)/(FV) * (360/T)
HPY - correct answer [(P1+D1)/P0] - 1
EAY - correct answer (1+HPY)^(365/T) - 1
HPY (MMY equation) - correct answer MMY * (T/360)
MMY - correct answer HPY * (360/T)
Geometric return - correct answer [(1+r1)(1+r2)(1+r3)]^(1/n) - 1
Time weighted return - correct answer [(1+HPY1)(1+HPY2)(1+HPY3)]^(1/n) - 1
Harmonic Mean - correct answer [N/(sum of (1/sample means))]
Position of observation - correct answer (n+1)*(k/100)
Excess kurtosis - correct answer Sample kurtosis - 3 (3 is normal kurtosis)
Mean absolute deviation - correct answer sum of: (mean - sample mean)/n-1
Variance - correct answer (x-mean)^2/N (population) and divided by (n-1) for a sample
Coefficient of Variation - correct answer Sample standard deviation/sample mean
Sharpe Ratio - correct answer Risk of portfolio - risk free / Standard deviation of portfolio Joint Probability - correct answer P(AB) = P(A|B) * P(B)
Addition rule - correct answer P(A or B) = P(A) + P(B) - P(AB)
Multiplication rule - correct answer P(A and B) = P(A)*P(B)
Total Probability Rule - correct answer P(A) = P(A|B1)*P(B1)...+P(A|B2)*P(B2)
Expected Value - correct answer P(x)*(x)
Covariance - correct answer P[(Ra - E(Ra) * (Rb - E(Rb)] - sum for all probabilities that sum to 1 OR [SDa*SDb*correlation)
Correlation - correct answer Covariance(A,B) / SDa*SDb
Portfolio expected return - correct answer weight times the E(R) of each stock
Portfolio variance - correct answer Wa^2*SDa^2 + Wb^2*SDb^2 + 2WaWb*SDa*SDb*Corr(a,b)
Baye's formula - correct answer P(new info) / unconditional probability of new info*prior prob of event
Combination binomial - correct answer nCr - order doesn't matter
Permutation binomial - correct answer nPr - order matters
Binomial probability - correct answer nCx * p^x * (1-p)^(n-x)
Binomial Expected value - correct answer nP
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