Community Q&A
Expert-verified answers to your financial certification questions. Ask, learn, and connect with fellow candidates.
Updated
How do I use the Jarque-Bera test to check residual normality?
The Jarque-Bera test evaluates whether a sample comes from a normal distribution by jointly examining its skewness and kurtosis.
How often must indefinite-lived intangibles be tested for impairment?
Indefinite-lived intangibles tested annually plus triggering events. Compare carrying to fair value; impairment equals excess.
What does it mean when receivables grow faster than sales?
Receivables up 28% vs sales up 9% signals revenue acceleration, loose credit, or channel stuffing. Check DSO, allowance coverage, and peer benchmarks.
What are explicit vs implicit trading costs and how do they affect portfolio performance?
Trading costs are one of the most underappreciated drags on portfolio performance. The CFA Level III curriculum divides them into explicit (visible) and implicit (hidden) categories, and for institutional investors, implicit costs typically dwarf explicit ones.
What alternative data sources are used in credit scoring and what are the regulatory concerns?
Alt-data includes cash flow, rent, telecom, payroll, and public records. It expands access but triggers FCRA, ECOA disparate impact, CFPB adverse action, and privacy concerns.
How does machine learning credit scoring compare with traditional logistic regression?
GBMs usually beat logistic by 2-8 Gini points but at the cost of interpretability, stability, and regulatory explainability. Most banks deploy ML as challenger first.
What's the difference between a strap and a strip option combination?
Strap = 2C+1P (bullish vol bias); Strip = 1C+2P (bearish vol bias)...
What is a straddle and when would you use it?
Long straddle = long call + long put at same strike, profits from large moves either way...
What's the difference between cash-settled and physically-settled futures?
Cash settlement credits/debits the difference in cash at expiry; physical settlement requires actual delivery of the underlying. Indices use cash; commodities typically use physical.
How do delivery months and expiry work for futures?
Each listed contract references a delivery month. The contract stops trading on an exchange-specified last trading day, and delivery occurs during a multi-day delivery window.
How do rating agencies measure rating migration over time?
A rating transition matrix is a square table showing the probability that an issuer at rating X today will be at rating Y one year later. Rows sum to 100%...
What is vega and which options have the biggest vega exposure?
Vega = S·√T·φ(d1) and is largest for long-dated ATM options. A 2-year $100 ATM call has vega ~5x a 1-month version on the same name.
Explain extension risk — why does my MBS get worse when rates rise?
Extension risk is the lengthening of MBS life when rates rise and borrowers stop prepaying. Investors are stuck with below-market coupons longer, amplifying duration losses.
How do I price a barrier option using Monte Carlo simulation?
Barrier options pay only if the underlying hits or avoids a trigger during life. For a down-and-out call, simulate thousands of paths...
How does the implied vol surface move over time?
The surface doesn't move rigidly. Sticky strike keeps sigma(K,T) fixed; sticky delta keeps vol for a given moneyness fixed; sticky local vol follows Dupire's equation.
How does the color Greek describe gamma decay?
Color is the derivative of gamma with respect to time, describing how gamma itself ripens or decays as expiration approaches.
Which metrics best show that inventory management is improving?
Credible inventory improvement leaves a fingerprint across four metrics: DIO, gross margin, obsolescence reserves, and cash conversion cycle.
How should I analyze uncertain tax positions (UTPs) under ASC 740?
Uncertain tax positions are tax benefits claimed on returns but not recognized on financials because the more-likely-than-not threshold isn't met. Brindall's $186M UTB is accrued as a liability...
What is a quanto swap and when would a corporate use one?
A quanto swap pays foreign rates in domestic currency with no FX exchange but requires a correlation-based adjustment.
How does immunization work when I have multiple liabilities at different dates?
Multi-liability immunization uses aggregate duration, duration plus convexity, or key-rate duration matching. Combination matching (cash-flow for near term, duration for far term) is often best.
Want unlimited access?
You've browsed several pages. Sign in to save your spot, bookmark questions, and unlock all 4,665 community questions plus expert-verified study materials.
Have a Question? Ask Our Experts
Register to ask questions, get expert-verified answers, and connect with fellow certification candidates preparing for CFA, FRM, CIA, CPA, and EA exams.