CFA Level 1,June'13: Questions/ Discussions

MBA CAT 2022
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Puys,It is peak time to start our studies seriously for June’13 exam. I am starting this thread where CFA Level-1 aspirants can post their questions related to every topic. It would be of great help to every aspirant and would give us a feeling …

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Puys,

It is peak time to start our studies seriously for June'13 exam. I am starting this thread where CFA Level-1 aspirants can post their questions related to every topic. It would be of great help to every aspirant and would give us a feeling of group study too.
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@Estallar12 @TONYMBA @kushalagg @FeRMioN @anand5787
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@mjmegha
nice initiative, i will be active on this thread
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@mjmegha : m planning to give l1 on dec 2013...anyways early prep will help & i will be active in this thread once i receive the schweser notes
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aftr the xat exam gets over i'l start for cfa......anyways good work megha

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@thomaschandy All the best for XAT...:)
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What is the differnce between time-weighted return and money-weighted return?

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Ques: Birds divided into categories of songbirds, birds of prey, scavengers, and
game birds.
Why have they put it in nominal scale and not in ordinal scale although birds are categorized on the basis of some characteristics?
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@mjmegha said:
Ques: Birds divided into categories of songbirds, birds of prey, scavengers, andgame birds.Why have they put it in nominal scale and not in ordinal scale although birds are categorized on the basis of some characteristics?
Because ordinal scale is used when some magnitude is brought into play. Nominal scale is used when there is a classification but no information of magnitude. Here categories of birds are given songbird, birds of prey etc. but no relationship stating which is greater in nos. thus nominal scale is used
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@kushalagg Do we have Regression Analysis in CFA L1 syllabus?
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@mjmegha No its in level 2
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@kushalagg Okay..
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yup level 2

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Hey, can anyone please explain me Monte Carlo Simulation and Historiacal simulation?
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In monte carlo simulation, a set of values is generated for one or more risk factors associated with a security. Then each values are used in pricing model, each according to their probability distribution. This is repeated a lot of times and then a mean value is arrived at which is considered as mean value of security.


In contrast historical simulation uses actual movements in values of price and risk factors. This is incorporated taking values over different periods and a mean is arrived at.

Comparing the two, Monte Carlo simulation is as sound as the assumption we make in the risk and price models. However, it can factor a lot of scenarios.
Whereas, historical simulation does not cater to every scenario, as historical data may not be an accurate indicator of future. Also, infrequent events may not be incorporated in historical estimates.
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@kushalagg Can you please give me an example of Monte CArlo simulation?
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It can be used to model project schedules, where simulations aggregate estimates for worst-case, best-case, and most likely durations for each task to determine outcomes for the overall project.
Basically it takes factors in all possible scenarios and likely timelines for each task in a project and then sum it up to find relevant outcome
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@kushalagg Thanks!!
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In!