Primary vs Secondary Capital MarketIntroduction: Capital market refers to any part of the financial system that raises capital from bonds, shares, and other investments. New stocks and bonds are created and sold to investors in the primary capital market, while investors trade securities on the secondary capital market. (more…)
HEDGE FUND STRATEGIESINTRODUCTION Hedge Fund form an important subset of alternative investments. Investment in hedge funds would result in ample additional benefits for alpha and portfolio diversification to warrant a high level of fees.
- Pros - HF managers huge talent - the broader universe - ability to generate alpha even in down markets.
- Cons-higher fees, complex documentation, lack of transparency, lack of liquidity, higher cost of maintenance.
Total Return SwapA Total Return Swap (TRS) is a swap agreement in which one party makes payments based on a set rate either fixed or variable while the other party makes payments based on the return of an underlying asset which includes both income which it generates and capital gains. The underlying asset can be a bond, equity, or loan. Banks and other financial institutions use TRS agreements to manage risk exposure with minimal cash outflow. Though TRS has become more popular due to the increased regulatory investigation after it claims the manipulation of credit default swaps (CDS). The asset owner forfeits the risk connected with the asset but absorbs the credit exposure risk that the asset is subjected to. (more…)
What is Basis RiskBasis Risk is a type of systematic risk that arises where perfect hedging is not possible. When there is a variation between hedge/futures price and cash/spot price of the hedged underlying at any given point of time, that variation is called ‘Basis’ and risk associated with it is called Basis Risk. (more…)
What are the Minimum Passing Score for the FRM Level 1?
There is no such fixed defined minimum passing score set by the institute [GARP] as a minimum passing percentage. As highlighted by the institute, around 46% is the pass percentage for FRM level 1 and this passing percentage keeps fluctuating between 40% – 60%. every year.Pass Percentage for Previous Year for FRM Level 1 Exam has been as per below.
- 2017 - 45%
- 2018 - 42%
- 2019 - 46%
We all are acquainted with the FRM exams and the levels needed to be cleared so as to become Certified FRM. The question rather we should be focusing on is “How difficult is the FRM exam by GARP?”There is a popular belief among candidates that FRM exams are hard to crack because of quants involved. However, the level of difficulty depends upon many circumstances and the instances are distinct for each candidate who is preparing for the exam. The overall curriculum is not extensive and the total readings withing the syllabus are limited. Since FRM is based on the application of the risk management concepts, the curriculum includes case studies that add a reference to the real-world business scenarios. So, most of the topics are very interesting, including the topics in the quants section as well. (more…)
FRM Books - Which Material should you use?While preparing for the FRM Exam you will find so many suggestions and books to prepare. Below is the list of books or materials available for your preparation. Below are available Books/Preparation Material - FRM Books GARP Institute Book - Pros:
- You get a detailed understanding of the concepts
- Reliable as provided by the institute so can be sure all concepts will be covered
Appearing for CFA & FRM together?What is FRM??
- Financial Risk Management Exam is conducted by the Global Association of Risk Professional (GARP).
- The exam is conducted in 2 levels.
- The exam is conducted in May and Nov every year.
- Both the Level can be given together in a single attempt.
- Further, you need 2 years of experience to get certified plus a bachelor's degree.
CFA ® or FRM ®: Which is Better Course?One of the most common questions observed among financial professionals is which course should they pursue- CFA ® or FRM ®? Both of these credentials are quite prestigious and they are equally recognized worldwide. Let us have a detailed look at both the certifications, their scope, and the career prospects offered by each of these courses. (more…)