Highlights included ‘advantages of debenture trust deeds’, calculating the local returns on bonds issued in 2 different exchanges with no details on exchange rates, ‘adjustments required when calculating equity risk premiums from historical data’, 12 marks on why you might underperform when trying to track an index, and some obscure question on a bond with coupons and redemption linked to annuitant mortality.
exam I thought it was fairerthan last September's exam (at least they didn't ask numerical questions from subject 108 again). Fingers crossed.
With regard to the bonds in two differnet currencies: I assumed that the Gov.Bond yields reflected the expected change in currency rates. So I added the Sterling Credit risk premium to the Yen Gilt yield. I have no idea whether this was correct. I also seem to recall something about Debenture Trust deeds in the CT subject, but have forgotten all about it. I had to work that one from first principles. All in All I thought it was a nice paper, but was surprised to see no Performance allocation. This is probably a good thing, although it is conceptually easy, it is a lot of calculations, and easy to make mistakes with. All hail bookwork!
Yeah, I'm always happy with a bookwork style paper and the lack of calcs was good. The 12 marker on passive fund management was a tricky one and the yen bonds was the 'odd' question on the paper - it'll be interesting to read aset if I resit - "The examiners said that students struggled with this one".
