Wed 5 Dec 2007
I’ve been copying-and-pasting some useful info for a while. Now the situation is reversed.
I hope this isn’t any kind of copyright infringement. Thank you all!
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This mnemonic is useful when trying to remember what goes below the line.
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Anyone got any good ones? These are usually good for last minute prepping.
I saw this one off another AF member:
Type I Error – RTN (Reject True Null)
Type II Error – FRFN (Fail to Reject False Null)
Here’s two of mine:
In regards to premium and discount bonds and the effect on CFO, just remember the opposite is true for CFF.
CFO – premiunderstated/ discouverstated
Utilitarianism – Communist
Symmetry Principle – Capitalist
Anyone got good ones?
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I thought of 3 and they may sound weird but this is what I thought of when I was studying.
Sharpe Ratio – Michael Richards has a sharp tongue. (Market returns – risk free rate) / standard deviation. Market returns = Michael. risk free rate = Richards. sharp = standard deviation.
Coefficient of correlation – Russians in San Diego. covariance / (standard deviation 1 * standard deviation 2). CCC is a Russian acronym which is correlation coeffiicent covariance. San Diego is standard deviation.
Dow – Police department. Police = price weighted. Department = dow. The dow is a price weighted index.
I said they may sound weird but I remember them.
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In any case I found some mnemonics I’ve scribbled down with regard to the Code of Ethics.
AICDR — II — RCIPJ — PPC — PIU — MIPC
1. ACT with INTEGRITY, COMPETENCE, DILIGENCE, RESPECT (*AICDR*) and in an ethical manner with the public, clients, prospective clients, and other participants in the global market.
2. Place the INTEGRITY of the investment profession and the INTEREST (*II*) of the clients above their own personal interests.
3. Use a REASONABLE CARE and exercise INDEPENDENT PROFESSIONAL JUDGEMENT (*RCIPJ*) when conducting investment analysis, making investment decisions, taking investment actions, and engaging in professional activities.
4. PRACTICE (*PPC*) and encourage others to PRACTICE in a professional and ethical manner that will reflect CREDIT on themselves and the profession.
5. PROMOTE the INTEGRITY of and UPHOLD (*PIU*) the rules governing, capital markets.
6. MAINTAIN and IMPROVE their PROFESSIONAL COMPETENCE (*MIPC*) and strive to maintain and improve the competence of other investment professionals.
In any case I don’t understand how I could possible memorize that list for more than five minutes:
1. AICDR
2. II
3. RCIPJ
4. PPC
5. PIU
6. MIPC
Maybe it’s easier in this way.
1. I SEE, DARJEELING FOR ALL.
2. AY-AY!
3. RECIPE (FOR SUCCESS IS A)
4. PEACHY
5. PIOUS
6. PIC
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Portfolio mgmt / Investment policy
TURTLe
T – Time horizon / constraint
U – Unique requirement
R – Regulatory /legal req
T – Tax concerns
L – Liquidation / earlier needs
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As a handy mnemonic, remember "he’s leveraged up to his ass/balls" means "he has borrowed a lot of money". You may want to repeat this a few times until it gets tattooed onto your brain.
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Ok, here’s a few that are guaranteed to be on the test, but make sure your in your last minute Level I prep that you’ve done the Schweser exam posted on this site.
Here’s a couple that will put you over the top:
1. Know the 5 factors determining intensity of competition within an industry:
Remember SERBS
– The 5 factors that determine industry attractiveness:
Suppliers of raw materials
Entrance Barriers
Rivalry
Buyers (power over product/pricing)
Substitute products
2. Know Risk from Lowest to Highest
Remember: British Broadcasting Corp Has Silly Office Comedies All Fall
Bill/Bond/Corp/House/Stock/Office(commercial RE)/Coins/Art/Futures
3. Assumptions underlying CAPM model"
"CAPM Prices Hold Borrowers and Lenders;
Taxes and Transactions ReMOVe RiSC"
Investors are PRICE takers.
(Eliminates negotiated deals.)
2. All investors have the same HOLDing period.
(Eliminates time risk.)
Investors can only BORROW and LEND at the
risk free rate.
(If not you’ll have two CMLs, two CAPMs and
no equilibrium.)
No TAXES and TRANSACTION costs.
Investors are all Rational Mean Variance
Optimisers. (ReMOVe)
All investors have the same expectations for
Return, Standard deviation and Correlation.
(RiSC)
4. Portfolio Management Level I
Steps in Decision Making Process = OSMAP
OBJECTIVES STRATEGIES MONITOR (THE MARKET) ADJUST PORTFOLIO
5. Steps to carry out OSMAP = SEXPOP
SPECIFY OBJECTIVES EXPECTED RETURNS POLICY STATEMENT
OPTIMUM PORTFOLIO PERFORMANCE MONITORING
6. elastic and inelastic demand curves (economics)"
If you have trouble remembering the difference between elastic and inelastic demand curves, remember that:
Inelastic’ starts with a capital I, that is, a vertical line, so prices can move up or down but the demand remains the same.
Similarly, ‘elastic’ starts with an ‘e’, which has a horizontal line in it, so
demand can move to different levels but the price remains the same.
7. Know the characteristics of a good market
Remember "I LIE" (nothing personal)
Information (timely and accurate)
Liquidity : marketability , price continuity and depth
Internal efficiency low transaction costs
External efficiency prices adjust quickly to new info
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