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Financial Modeling Courses

How to build a financial model in Excel from scratch

CFA Level 2 exam pass rates

Can you pass the CFA level 2 exams with these pass rates? …

Nominal vs. Effective Interest Rates

The ideas behind nominal and effective interest rates are fairly simple, but you need to be sure that you understand the differences, and that you know which convention is used for which common rate quotes. At the heart of the difference is the idea of compound interest, so let’s start there. Throughout this article, we’ll measure time in years, so unless specified otherwise, interest will be quoted as an annual rate.

How to Approach the Level II CFA Exam

If you’ve never taken the Level II CFA exam, you’re in for a real treat.  (If you’ve taken it before, you already know what I mean.)  As with the Level I exam, this exam...

Cash (Currency): the Wonky Commodity

Throughout Level II and Level III – and a little bit at Level I – we see calculations that involve commodities; e.g., calculating the price or value of a forward or futures contract on an underlying commodity.

Arbitrage

Arbitrage means the ability to earn a profit without risk. One method by which arbitrage is commonly accomplished by buying an asset in one market, and simultaneously selling an identical asset in another market at a higher price (e.g., T-Notes or T-Bonds). Another is by borrowing an asset (e.g., a currency) and investing it at a guaranteed return that is higher than the borrowing cost. A third is by trading one asset for an identical asset (e.g., ETFs, multi-currency trades, put-call parity)…

Amortization Tables

Although you are not allowed to use Excel (or any other spreadsheet program) on the exam – you have to survive with your lowly financial calculator – it’s still useful to be able to create amortization tables in a spreadsheet, to help you visualize the cash flows and account balances in a variety of financial applications.