Financial Exam Help 123

Day: June 8, 2016

  • Cross Hedge vs. Proxy Hedge

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    by

    Bill Campbell
    in

    Level III candidates often confuse cross hedges and proxy hedges.  This isn’t their fault: one of the readings makes a distinction between these, while another claims that they’re the same (though it includes a footnote that says that they’re different). Sigh. Suppose that your domestic currency is the Canadian dollar (CAD), and that you have…

  • Linear Interpolation/Extrapolation

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    by

    Bill Campbell
    in , ,

    After reading a number of posts on AnalystForum in which candidates have had difficulty with linear interpolation or extrapolation, I figured it was time to write an article on the subject.  At Level I it applies to binomial trees for calculating the weights for equity options, and for combining risky portfolios with the risk-free asset…