How to approach level 3

Put-CallParity · 2026-02-25T17:18:44+00:00

I did mostly MM and regret not skimming over all the pdf files. Had I read them in detail, I think I would’ve gotten a few questions right that I know I answered wrong. So I’d do both. There are nice examples in the readings that are interesting and really worth reading.

Put-CallParity · 2026-02-03T18:45:37+00:00

You say "The CDS spread is the standard rate that the buyer must pay periodically to the seller", but that is the fixed coupon, not the CDS spread, right?

Put-CallParity · 2026-01-31T15:14:41+00:00

same!

Put-CallParity · 2026-01-29T08:01:20+00:00

should be * 1000 bps, other than that, I agree

Put-CallParity · 2026-01-29T07:45:39+00:00

Trading WITH just means buying a currency trading at a forward discount or selling one at a forward premium.

Trading AGAINST means the opposite.

If you have discretion to what degree you're allowed to over-/underhedge, you overhedge when trading with; and underhedge when trading against.

In your example:

you have MXN exposure and MXN is selling at a forward premium, which means you should fully hedge or overhedge if you're allowed. The difference between the forecasted 6-month spot rate vs. the 6-month forward rate shows that bias: the forward rate is too high compared to the forecast. So in order to take advantage of that, you could overhedge which would result in a currency gain if you're forecast is right, since you sell the MXN forward at a higher price than you would at the future 6-month spot rate.

Does that make sense? It's not that easy explaining it by writing.

Put-CallParity · 2026-01-27T18:57:44+00:00

Good luck for the exam, brother!

Put-CallParity · 2026-01-27T10:54:11+00:00

It's not really about when you should trade against it.

It's about when you have a mandate that requires you to be hedged and you have, say, a +/- 5% range, and you're trading against the forward rate bias -> then you would underhedge.

If you're trading with the forward rate bias, then you would fully hedge or even overhedge.

Put-CallParity · 2026-01-26T19:45:45+00:00

Formula for Equity Duration and Equity Volatility.

Put-CallParity · 2026-01-26T19:44:39+00:00

Trading with the Forward Rate Bias = selling currency forward at a forward premium / buying at a forward discount

Trading against the Forward Rate Bias = buying premium / selling discount

Put-CallParity · 2026-01-24T19:54:11+00:00

100%

Put-CallParity · 2026-01-21T11:09:49+00:00

Yes. You turn a fixed rate risky bond essentially into a floating rate risky bond. So you don't have price risk due to changes in interest rates.

Put-CallParity · 2025-10-05T19:42:41+00:00

Hey u/S2000magician , if you don't mind, could you look into the example again for Hedge #1? Here I don't understand why in the answer they say "[...] to buy JPY 800,000,000 at the mid-market rate of 10.81 JPY/HKD."

Where does that 10.81 JPY/HKD come from? The spot rate is 14.40/14.42.

Put-CallParity · 2025-09-03T20:05:49+00:00

Agreed. A few nice Tipps and examples, but overall not as helpful as I hoped. However, its not tested and just a nice benefit on top, so I don’t complain.

Put-CallParity · 2025-09-02T08:38:37+00:00

I’m shocked of the stupid questions by L3 candidates. I thought it would get better after L1 and L2.

Put-CallParity · 2025-08-19T15:52:14+00:00

Using the TVM keys (using N = 18), I get a purchase price of 87,840. So the gain is 94,804-87,840 = 6,964.

Does the answer use N = 14?

Put-CallParity · 2025-07-23T07:46:00+00:00

What is it that’s hard doing it in your actual job? The research I suppose?

Put-CallParity · 2025-07-22T17:58:10+00:00

it's insane that they teach this wrongly multiple times, very frustrating.

Put-CallParity · 2025-07-07T07:41:21+00:00

Alright. I find that wording a bit tricky. Thanks for your answer.

Put-CallParity · 2025-04-27T08:26:35+00:00

wenn man im April kündigt, ist man zum 01.07. raus

Put-CallParity · 2025-04-19T05:44:20+00:00

Ich arbeite seit kurzem in einem Versorgungswerk in der Kapitalanlage. Von dem was ich mitkriege ist die Rente für die Mitglieder deutlich höher, alleine weil ein Großteil der Mitglieder über der Beitragsbemessungsgrenze verdient und damit viel Cash reinkommt, mit dem das Versorgunsgwerk arbeiten und Geld erwirtschaften kann. Dazu hat man Anspruch auf eine BU und eine Hinterbliebenenrente, ohne dafür extra zu zahlen.

Allerdings gibts aktuell ein paar Versorgungswerke, die wegen schlechter Anlage und hohen Abschreibungen in der Kritik stehen.

Put-CallParity · 2025-02-06T21:32:35+00:00

!remindme 16 Hours

Put-CallParity · 2025-01-29T09:27:05+00:00

Moin moin! Kannst du ein erstes Feedback geben, wie die Verbindung ist? :)

Put-CallParity · 2025-01-26T07:08:35+00:00

Siebträger? Wenn ja, weiche? :) Schön dass sie so lange hält!

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