Challenges in Data Forecasting
Problems encountered in producing forecasts are (1) limitations to using economic data, (2) data measurement error and bias, (3) limitations …
Economics
Framework for Developing Capital Market Expectations
Cross-sectional consistency refers to consistency across asset classes regarding portfolio risk and return characteristics. Intertemporal consistency refers to consistency over various investment …
Module 11.2, LOS 11.e: Covered Interest Rate Parity and Uncovered Interest Rate Parity
Covered interest rate parity is the condition in which forward premiums or discounts are offset by interest rate differences between …
Module 11.2, LOS 11.d: Mark to Market Value of Forward Contract
The mark to market value is the difference between the locked in value of a forward contract and the current …
Module 11.1, LOS 11.b: Currency Cross Rates and Triangular Arbitrage
The cross rate is the exchange rate between two currencies implied by their exchange rates with a common third currency. It is …
Module 12.3 LOS 12.i: Classical growth theory, neoclassical growth theory and endogenous growth theory
Classical Growth Theory Based on the concept of a mean-reverting subsistence level, this theory from Malthusian economics contends that there …
Module 11.3 LOS 11.k: Mundell-Fleming Model, Pure Monetary Model, Dornbusch Overshooting Model, Portfolio Balance Approach
Monetary and fiscal policies can have effects on exchange rates. The CFA curriculum covers a few theories on the mechanisms …
Module 13.1 LOS 13.a,13.b: Types of Regulators and Self-Regulation in Financial Markets
Independent regulators are given recognition by government agencies and have power to make rules and enforce them. However, independent regulators …
Module 12.2 LOS 12.e: Cobb-Douglas growth accounting
The growth in potential GDP can be expressed by the following production function, called the Cobb-Douglas production function: ∆Y/Y = …
Module 12.a LOS 12.a: Economic growth factors
Economic growth is most often described as growth in GDP. Several factors have been shown to influence the growth and …