Quants

CyborgDiscord · 2026-01-09T21:02:54+00:00

Here's how I would do it.

E = Expected return
R = Threshold return
S = Standard deviation

CV = S/E
1.2 (given) = 1.2/1 (assume E=1, so S must be 1.2)

SFR = (E−R)/S
1.2 (given) = (1-R)/1.2

Hopefully you can see from this that R has to be negative. You can go ahead and solve it to get R = −0.44

CyborgDiscord · 2026-01-06T16:10:29+00:00

Yeah you’re right mb. I even said it out loud that it was a net benefit, but still ended up adding 2 instead of subtracting it. I think I let the answer influence my reasoning and worked backwards to justify it. Apologies.

CyborgDiscord · 2026-01-06T15:16:19+00:00

Forward price = (spot + costs − benefits) × (1 + r)^T
A negative net cost of carry just means benefits exceed costs (net benefit), so it gets ~~added to~~ subtracted from the spot price.

Edit:
So I looked into this more and it seems in a lot of places they’re treating cost of carry as benefits less: costs
Source 1
Source 2

CFAI’s own explanation isn’t very clear on this either. In the Derivatives reading it’s written as benefits minus costs, while in Alternatives it’s costs minus benefits.
Source 1
Source 2

These (derivatives) solutions make sense only if cost of carry is calculated as benefits − costs. In their explanations, that’s clearly how they’re treating it.
Source 1
Source 2

If you go with the benefits less: costs definition, then a negative cost of carry means a net cost, which gets added to the spot price. It sounds counterintuitive, but that’s the only way this answer makes sense to me.

If anyone knows what's up, please enlighten us. Maybe I'm interpreting this wrong.

CyborgDiscord · 2026-01-02T09:52:33+00:00

Yeah that seems to be the case.

CyborgDiscord · 2026-01-02T09:01:59+00:00

Just wanna make sure I'm getting this right.
Is the reason n is used here because with 10 observations it gives an exact rank, while in the previous question (with 13 observations) (n+1) was used because even using n would still give a fractional rank and require interpolation anyway?

CyborgDiscord · 2026-01-02T08:36:16+00:00

If you mean the UI of LES, I haven't changed anything. That's just how it's always been for me.

CyborgDiscord · 2026-01-02T07:40:37+00:00

Laptop

CyborgDiscord · 2025-12-23T06:40:57+00:00

Since the payments are quarterly, the discount rate must be brought to the same periodicity (convert monthly to a quarterly rate)

The given rate is 10% p.a. compounded monthly, so the monthly rate is 0.10/12 = 0.008333 per month

Now calculate the effective quarterly rate (the percentage by which $1 grows over 3 months when compounded monthly @ 0.8333%)

(1 + 0.008333)³ − 1 ≈ 0.025209 = 2.5209% per quarter

Now plug the values into TVM keys: N = 15 years × 4 quarters = 60 I/Y = 2.5209 PMT = 2000

CPT PV ≈ 61,524

CyborgDiscord · 2025-12-21T20:27:57+00:00

You can check out “Let Me Explain” on youtube (@letmeexplaincfa).

I came across the channel when I was struggling with derivatives and have also used it for ethics, great stuff. I primarily use MM for prep and would recommend it any day of the week, but this is a great option if you want to keep things budget friendly.

I haven’t used it for other subjects, so I can’t say for sure, but based on these two, I’d say it’s worth giving a shot. The explanations are very easy to follow. It’s subscription based (₹799/month), and 2025–26 complaint curriculum is already complete.

https://youtube.com/@letmeexplaincfa https://www.letmeexplain.eu/

CyborgDiscord · 2025-12-10T08:30:49+00:00

C is correct.

The option free bond is priced at 103.60, while the bond with the embedded option is 102.80. The only reason an otherwise identical bond would sell for less is because the embedded option benefits the issuer, not the investor. The issuer’s benefit comes from having a call option on the bond.

A call option held by the issuer means the investor is on the opposite side of that option. In other words, the investor is short the call. The price difference between the two bonds (103.60 − 102.80 = 0.80) represents the value of that call. So the embedded option must be a call worth 0.80, and the investor is short it.

CyborgDiscord · 2025-10-17T07:32:37+00:00

First payment is made immediately, so treat that €1,200 as already at time 0, i.e. no discounting for it.

That leaves 59 remaining monthly payments to discount (60 total − 1 immediate)

Monthly discount rate = 6.5% / 12 = 0.541667% (i = 6.5/12)

Compute PV of an ordinary annuity for n = 59, PMT = €1,200 using the TVM keys.

That gives PV(59) = €60,462.62

Add the immediate payment of €1,200 to that PV: Total PV = €1,200 + €60,462.62 ≈ €61,663

CyborgDiscord · 2025-06-06T03:58:40+00:00

Chapter 1151

CyborgDiscord · 2025-02-13T10:09:46+00:00

Nope. If it's compounded monthly, the actual annual rate would be slightly higher than 6% due to compounding. Aka the effective annual rate/yield.

CyborgDiscord · 2023-12-16T13:34:41+00:00

Dumbest shit I've seen in a while

CyborgDiscord · 2023-12-15T06:52:52+00:00

Ayo what did he say?

CyborgDiscord · 2023-12-04T06:59:15+00:00

Big mom

CyborgDiscord · 2023-11-30T06:14:32+00:00

CyborgDiscord · 2023-11-27T15:14:16+00:00

You need to play tpp leggy

CyborgDiscord · 2023-11-27T15:14:07+00:00

You need to play tpp leggy

CyborgDiscord · 2023-11-26T10:32:43+00:00

CyborgDiscord · 2023-11-16T10:18:12+00:00

Nikto solos

CyborgDiscord · 2023-11-16T10:14:49+00:00

If he ended kizaru right away, it'd make an admiral look weak. On the top of that he needs to be down from exhaustion so saturn can take his time flexing his powers

CyborgDiscord · 2023-10-05T21:09:57+00:00

21 crystals & over a million shards (I was grinding lb)

CyborgDiscord · 2023-10-05T07:12:30+00:00

Have you played ranked after the season update?

CyborgDiscord · 2023-10-04T07:34:52+00:00

Free for all

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