Which formulas do you find irritating to remember?

For me its the ones with exchange rates - forward, spot and inflation ones and order of numerator and denominator.

Also the FCFF/FCFE catches me out as its quite uncommon.

Thoughts?

Which formulas do you find irritating to remember?

For me its the ones with exchange rates - forward, spot and inflation ones and order of numerator and denominator.

Also the FCFF/FCFE catches me out as its quite uncommon.

Thoughts?

same here, pretty much

I find exchange rates formulas are not too difficult to memorize since you may be using it in real life anyway when travelling. Think of your own currency in exchange for another currency that is definitely cheaper or more expensive (don’t use CAD/ USD as they are too similar) then always remember that scenario and what “makes sense” to put on the numerator and denominator.

Also FCFF/FCFE you need to memorize ONE example and really understand the concepts, put a story on it, FCFF is for both debt and equity owner, and FCFE is for equity holder only. Try to think of what makes sense to include/ exclude for these stakeholders.

Good luck!

I find exchange rates formulas are not too difficult to memorize since you may be using it in real life anyway when travelling. Think of your own currency in exchange for another currency that is definitely cheaper or more expensive (don’t use CAD/ USD as they are too similar) then always remember that scenario and what “makes sense” to put on the numerator and denominator.

Also FCFF/FCFE you need to memorize ONE example and really understand the concepts, put a story on it, FCFF is for both debt and equity owner, and FCFE is for equity holder only. Try to think of what makes sense to include/ exclude for these stakeholders.

Good luck!

If you re-arrange the formulas for Interest rate parity, Purchasing power parity and international Fisher effect, they are pretty much the same for the 3 formulas. It’s always:

Forward (or forecast) rate A/B = Spot rate A/B x [1 + i(A) / 1 + i(B)]

with i being the inflation rate or the interest rate

and if the given exchange rate is A/B, the “order” is going to be the same for the fraction > use the inflation/interest rate of A for the numerator; and the one of B for the denominator

I was also a bit confused at first, but since i inderstood that, I’ve not made mistakes anymore with these formulas.

Hope it helps

Any tips on how to remember the formula for MacDur???

I have resigned to just doing the long hand approach calculating the PV of each cash flow and the weights and so on.

From my understanding is to memorizing formula’s. is to just Repeteadly spend 2 hours a day writing down all the formula’s. I know it seems tedious and long however it should take you about 15-20 min to finish writing all the formula’s on paper. The more you write it the more u will remember

As far as I know, there’s no way to do it other than the long-hand approach.

Note, that you can calculate the Macaulay Duration with the BA II Plus Professional using the bond function. This will save a lot of time compared to “the long hand approach”. Regards,

Oscar

I haven’t seen any problems where MacDur had to be calculated manually–is this something to reasonably expect?

Oscar, do you mind explaining how exactly to calculate this on the BA II Plus Professional calculator?

Attached the link to the TI website:

https://epsstore.ti.com/OA_HTML/csksxvm.jsp?nSetId=90570

If you google you’ll find more information on this. Regards, Oscar

haha, thanks. Understanding the functions of the calculator makes the exam easier

btw, the “Stats” function also helps a lot (especially in saving time) in quant

Another good very function is the AMORT worksheet. With this function you’ll be able to perform questions in FRA on Bonds which normally need extensive calculations within seconds, e.g. interest, remaining balance, discount/ premium amortization,… You’ll love it!

The DEPR worksheet for calculating depreciation values in certain years is also a big time saver. Regards, Oscar