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CFA Success: Webinar on Equity and Fixed Income

November 23, 2013
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This blog is an extension of our blog on CFA Webinar on Economics.

Round four of the CFA Webinar Question Answer sessions! This will aid your CFA prep in more ways than one. Find below a recording of the discussion on CFA Equity and Fixed Income.

The answers to the questions are given right here as well.

Find here a brief summary of some of the most important points of CFA Equity and Fixed Income:

#CFA Webinar

Question 1:

“Can you discuss Equity Multiplier?”

Answer 1:

“The equity multiplier is a way of examining how a company uses debt to finance its assets. Total assets/ Total stock holder Equities.”

Question 2:

“Please explain Zero Volatility Spread.”

Answer 2:

“It the equal amount of spread that we must add to each rate on the treasury spot yield curve in order to make the present value of the risky bond’s cash flow equal to its market price.”

Question 3:

“Could you please tell me the difference between the coupon rate of a callable and a non callable bond?”

Answer 3:

“Callable bond always has a greater coupon rate because bond seller has the right to call it back if conditions are favourable. But Non– callable bond has no option so it has a coupon rate lesser than Callable bond.”

Question 4:

“Can you explain the Boot-Strapping concept?”

Answer 4:

“The Bootstrapping concept involves discounting by spot rate not by one specified rate.”

Question 5:

“What is reverse stock split?”

Answer 5:

“Here stock split means giving 2 for 1. And reverse stock split means giving 1 for 2 just reverse of that.”

Question 6:

“What is Macaulay Duration?”

Answer 6:

Macaulay Duration estimates interest rate sensitivity based on time in years. Macaulay Duration is the earliest measure of duration. Hence, it is not an appropriate measure of interest rate sensitivity of bonds with embedded options.”

To read more, just follow the link to CFA Webinar on Quant.

If you have any queries, comments or questions feel free to post them in the comments section or visit our forum.

There will be subsequent blogs on more questions and discussions that will take place on the following days. So stay tuned for more!


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