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All posts for the day June 8th, 2016

Cross Hedge vs. Proxy Hedge

Posted by Bill Campbell III, CFA on June 8, 2016
Posted in: Level III Asset Allocation.

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 […]

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Linear Interpolation/Extrapolation

Posted by Bill Campbell III, CFA on June 8, 2016
Posted in: Level I General, Level II General, Level III General.

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 […]

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