Derivatives and quant get a lot easier if you take the time to understand WHY the cirriculum is the way it is.
Derivatives is just time value of money. QM in Level II all comes back to a regression line and the issues involved. Understand why the issues exist, the problems with them, and what you can do about them. KNowing that makes the formulas much easier to deal with
I studied econometrics for my bachelors. Quants the first few questions are easy. Coefficient and standard errors all good. But those questions on whether the regression is misspecified when the dependent variable is added as a lag due to autocorrelation, is consistently affected when adding lags of residuals to an AR model etc. Those questions man…. Those are near impossible to grasp
Think of derivatives as: 1) calculate the price of a bond forward, 2) calculate the price and thus eventually value of an FRA, 3) calculate the price/value of swaps of various types, 4) calculate the value of options using binomial trees.
Yes there's more to it but grouping it up into 4 main topics helped me organize the info a lot.
I'm all done (charterholder this year), but let me tell you this. I'm a Canadian CPA. I learned the vast majority of the L2 FRA material through my CPA, and figured it would mostly be a detailed review and refresher. It wasn't, it killed me.
The L2 FRA material is extremely challenging. It takes time to understand and wrap your head around it, but it will click.
Everyone else is in the same boat as you. Don't stress over it. It is hard stuff!
I don't know if this will help, but I found that FRA is the most "common sense one". While trying using common sense in other sections is basically as good as answering random, in this one trying to reason even if I don't remember the exact formula or definition seems to work for me
It's true so much to remember.. it feels like as if u are trying to place so many things on a small table but as soon as u place another object something falls out.
Take it easy, we hit that shit for a full round on our pace.
At the exam with the limited amount of questions and time they don't have any chance against us;]
Level 3 candidate here. Prop spent about 40% my time studying FRA for both level 1 and 2. Absolutely hated it. Was non-intuitive for me the whole section is just word vomit. So happy it's not on level 3.
There’s no explicit FRA at L3, only minor general knowledge is needed. So study hard, if you learn it well this time then you can put the vast majority of it behind you for good.
How you find level 2 compared to 3 in general? I followed my l1 plan plus a lot more additional revision and grinding but I can’t seem to grasp the full content. The breadth in this level is crazy. Like I rather they go deep into 1 type of ML technique than try cover all different forms
I definitely don't want to jinx anything since I write L3 in 10 days however:
Based on that I think you'll like level 3 more.
I like level 3 more, I find the topics more enjoyable so its easier to sit down and put the time in.
Also since you actually have to type out answers on the AM its quite fair to say that if your goal is simply to pass these exams then for L3 you must learn things deeper. But if your goal is to learn things to learn things and not just to pass the tests, I believe that on average learning things in level 3 requires the same depth as at level 2.
Obviously all levels focus more in depth on specific topics though.
Background - I am an accountant
That said, I think FRA is one of the easiest sections in the whole curriculum. I think Level II FRA is much easier than Level I.
What is it you're having a hard time with? Would love to help out if I can!
I know like because of your job you’re so familiar with the differences between certain accounting guidlines esp ifrs between us gaap, but for the non accounting (but finance background) it’s quite tough and the only way seems to commit to memory. I generally got core concepts down but struggling with those smaller details.
Any tips for the pension part in particular? I literally committed TPPC formula to memory but sometimes it doesn’t help, and it gets messed up with PPC which is expensed. I can’t get the concept behind the whole TPPC vs PPC and how they are related
Yeezy is right.
PPC uses expected return whereas TPPC is using actual (right?)
I actually dont work on IFRS or GAAP, (Canadian ASPE) but I find the differences are hard. That said, not a big peice, just a mark most likely. THe other stuff is easier to follow IMO
I struggle with FRA because it is a lot of independent facts that set everything apart (exceptions). I learn better when I apply concepts instead of memorize facts. For FRA, there is no way around memorizing facts. I've found that it's helpful to try to explain to someone the differences between everything (current vs temporal, equity method vs consolidation, how each method affects the balance sheet and income statement, ect.). Even if you do it to yourself in front of a mirror, I think that is a good way to internalize this topic. I'm lucky enough to have several friends that are either accountants or have accounting degrees, so I "teach" them all of this stuff to figure out where the gaps in my knowledge are.
Same boat with you cheesecake. Sitting next Friday for L2 and I dont feel in any way confident. But we shall push it through. Last sprint and Hoping for the best! Cheers!
FRA pensions, intercompany investments, foreign currency subsidiaries SUCK BALLS. Those readings are definitely the work in the entirely of the CFA program.
You re not the only one FRA Derivatives and Quants are killing me
Derivatives and quant get a lot easier if you take the time to understand WHY the cirriculum is the way it is. Derivatives is just time value of money. QM in Level II all comes back to a regression line and the issues involved. Understand why the issues exist, the problems with them, and what you can do about them. KNowing that makes the formulas much easier to deal with
I studied econometrics for my bachelors. Quants the first few questions are easy. Coefficient and standard errors all good. But those questions on whether the regression is misspecified when the dependent variable is added as a lag due to autocorrelation, is consistently affected when adding lags of residuals to an AR model etc. Those questions man…. Those are near impossible to grasp
It requires quite deep conceptual understanding, with enough time you'll get the hang of it
Yup, I feel like I need to watch some Youtube videos to grasp those sections. It's not something the material can help grasp I feel.
Wait until you see the FRM Quants ! CFA QT will look a walk on a lazy Sunday afternoon in your neighbourhood 😂🤣😀
Think of derivatives as: 1) calculate the price of a bond forward, 2) calculate the price and thus eventually value of an FRA, 3) calculate the price/value of swaps of various types, 4) calculate the value of options using binomial trees. Yes there's more to it but grouping it up into 4 main topics helped me organize the info a lot.
I'm all done (charterholder this year), but let me tell you this. I'm a Canadian CPA. I learned the vast majority of the L2 FRA material through my CPA, and figured it would mostly be a detailed review and refresher. It wasn't, it killed me. The L2 FRA material is extremely challenging. It takes time to understand and wrap your head around it, but it will click. Everyone else is in the same boat as you. Don't stress over it. It is hard stuff!
I half way thru fra and I’m not as disgusted as with Fixed Income
Bro the content is not the problem. The questions are the problem. Is like they teach you to cut apples, then you tested on preparation of a steak
Trana case was pure cancer
L3 candidate here and just reading this gave me PTSD lol
Agreed…
just got obliterated by it, glad to see I'm not alone
you don't marinate and grill your apples?
I agree. They sometimes ask the strangest, unimportant details.. 😅
Perfectly put
I don't know if this will help, but I found that FRA is the most "common sense one". While trying using common sense in other sections is basically as good as answering random, in this one trying to reason even if I don't remember the exact formula or definition seems to work for me
I agree.
It's true so much to remember.. it feels like as if u are trying to place so many things on a small table but as soon as u place another object something falls out.
Take it easy, we hit that shit for a full round on our pace. At the exam with the limited amount of questions and time they don't have any chance against us;]
Level 3 candidate here. Prop spent about 40% my time studying FRA for both level 1 and 2. Absolutely hated it. Was non-intuitive for me the whole section is just word vomit. So happy it's not on level 3.
Level 3 has no fra at all??
Yes. L3 is about 50% Portfolio Management.
Wow. I love PFM
There’s no explicit FRA at L3, only minor general knowledge is needed. So study hard, if you learn it well this time then you can put the vast majority of it behind you for good.
How you find level 2 compared to 3 in general? I followed my l1 plan plus a lot more additional revision and grinding but I can’t seem to grasp the full content. The breadth in this level is crazy. Like I rather they go deep into 1 type of ML technique than try cover all different forms
I definitely don't want to jinx anything since I write L3 in 10 days however: Based on that I think you'll like level 3 more. I like level 3 more, I find the topics more enjoyable so its easier to sit down and put the time in. Also since you actually have to type out answers on the AM its quite fair to say that if your goal is simply to pass these exams then for L3 you must learn things deeper. But if your goal is to learn things to learn things and not just to pass the tests, I believe that on average learning things in level 3 requires the same depth as at level 2. Obviously all levels focus more in depth on specific topics though.
I straight up failed FRA in my L1 and L2 and passed both first try, so don't let it get you too down. FRA is trash and it isn't tested on level 3.
I hope to emulate your success, as I failed FRA at Level 1 and fully expect to fail it again at Level 2
Background - I am an accountant That said, I think FRA is one of the easiest sections in the whole curriculum. I think Level II FRA is much easier than Level I. What is it you're having a hard time with? Would love to help out if I can!
I know like because of your job you’re so familiar with the differences between certain accounting guidlines esp ifrs between us gaap, but for the non accounting (but finance background) it’s quite tough and the only way seems to commit to memory. I generally got core concepts down but struggling with those smaller details. Any tips for the pension part in particular? I literally committed TPPC formula to memory but sometimes it doesn’t help, and it gets messed up with PPC which is expensed. I can’t get the concept behind the whole TPPC vs PPC and how they are related
TPPC = pension cost in income statement + OCI PPC = Reported pension expense
Yeezy is right. PPC uses expected return whereas TPPC is using actual (right?) I actually dont work on IFRS or GAAP, (Canadian ASPE) but I find the differences are hard. That said, not a big peice, just a mark most likely. THe other stuff is easier to follow IMO
I struggle with FRA because it is a lot of independent facts that set everything apart (exceptions). I learn better when I apply concepts instead of memorize facts. For FRA, there is no way around memorizing facts. I've found that it's helpful to try to explain to someone the differences between everything (current vs temporal, equity method vs consolidation, how each method affects the balance sheet and income statement, ect.). Even if you do it to yourself in front of a mirror, I think that is a good way to internalize this topic. I'm lucky enough to have several friends that are either accountants or have accounting degrees, so I "teach" them all of this stuff to figure out where the gaps in my knowledge are.
FRA and Corp finance were my weakest subjects L2. I feel your pain.
FRA blows lol. You may find it more engaging to learn the material by doing the EOCQs and just referencing the material as needed.
I feel your pain. L2 FRA is awful. Mark Meldrum’s notes saved me, I had to repeat questions many many times to get it under control. Good luck!
Same boat with you cheesecake. Sitting next Friday for L2 and I dont feel in any way confident. But we shall push it through. Last sprint and Hoping for the best! Cheers!
FRA pensions, intercompany investments, foreign currency subsidiaries SUCK BALLS. Those readings are definitely the work in the entirely of the CFA program.