19 CFA Level 3 Practice Exams 2015 Questions with Instant Answers on Fixed Income

19 CFA Level 3 Practice Exams 2015 Questions with Instant Answers on Fixed Income is the perfect solution to fill out your study and better preparation for exam day. Generally, many CFA test-takers see that most of the multiple choice questions are very well-founded and carefully thought out in the multiple choice format, that hugely aid them in drilling the dry study material and enhancing their retention ability. Additionally, relevant and clear response is given to every question, making your checking the result smoother. Crack free CFA level 3 practice exams below to obtain the extremely rewarding information for the next exam and we would be very glad if you drop some lines in the comment box!
To view full questions and answers, please kindly visit our site:  http://cfaexampreparation.com/932/19-cfa-level-3-practice-exams-2015-questions-with-instant-answers-on-fixed-income/

Horizon Matching is the combo of CFM and MLI. Portfolio is duration matched but also cash flow matched for the first few years. Pros: Provides liquidity in initial periodsReduces risk of non-parallel Yield curve shift.Cons: More Expensive .

• Combination Matching
• Immunizations
• Cash Flow Matching
• Immunization Risks (3 Main)

As time passes the duration of Investment won't exactly match time decrease. Or if Interest Rates move more than once.

• Duration vs. Key Rate
• Immunizations
• Rebalancing an Immunized Portfolio
• Ways to Minimize Immunization Risk

1. Market Value Risk - Duration Based.2. Income Risk - If cash flow is #1 priority - Longer duration is better.3. Credit Risk - Default Risk4. Liability Framwork - ALM - Long Term Liabilities should use long term assets.

• Duration vs. Key Rate
• 4 Extensions to Classic Immunization
• 4 Considerations in choosing a benchmark
• Combination Matching

1. Nominal Spread - Spread Between Bond Yield + Treasury of same maturity.2. Z-Spread - Spread added to the treasury spot curve to force equality3. O.A.S. Uses an interest rate treeWeighted Average and Sum.

• Immunization Risks (3 Main)
• Scenario Analysis (Page 18)
• Duration vs. Key Rate
• Spread Duration (weighted average)

Decompose payment streams to separately immunize each liability. Possible If:1. Assets & Liab have the same PV2. Assets & Liab. have the same duration3. The range of the distribution of durations > duration of the liabilities* This will still only protect from parallel shifts in Yield Curve. * Treat expected cash inflows as zeroes.

• Immunizations
• Multiple Liabilities
• Single Liabilities -
• Cash Flow Matching

Duration Calculates changes for a parallel yield curve shift.Key rate shows effects of a twist in the yield curve.

• Multiple Liabilities
• Duration vs. Key Rate
• Immunization Risks (3 Main)
• Combination Matching

Minimize Reinvestment Risk - minimize the distribution of maturities around a single liability date. Bullet securities close to liability dateMaturity Variance (M squared) - Variance of different maturities of bonds used in immunization vs. Liability.

• Multiple Liabilities
• Immunizations
• Combination Matching
• Single Liabilities -

Uses a multifactor model to find same risk factors in different securities:1. Separate bonds by risk factors.2. Measure the values of each cell to determine cell weight3. Buy a sample of bonds from each cell at exact weight.

• Combination Matching
• Stratified Sampling (or Cell Matching)
• Duration vs. Key Rate
• Cash Flow Matching