Passing exam 8

[quodlibet]

Sounds like Goldfarbs notes are the the way to go for exam 8.

If people who have passed 8 can respond: Were Goldfarbs problems provided at the end of each chapter and past exam questions sufficient to pass this exam or did the problems at the back of the respective chapters in the text books need to be done too. Wasn't sure how much of an overlap exists? Were there other sources for problems used? thanks.

[MNBridge]

I used both.

More than anything just so I could get more problems. Goldfarb's problems are often directly from the text (or very close).

I think (not sure) that Goldfarb recommends certain problems to do.

[quodlibet]

Thanks MNBridge. Did you go to Goldfarb's seminar? Is it worthwhile going even if you have his notes.

[quodlibet]

Thanks MNBridge. Did you go to Goldfarb's seminar? Is it worthwhile going even if you have his notes.

[Semprini]

I agree with MNBridge. Golfarb's problems do a good job of covering it, and his solutions are very insructive. But eventually, you will have them all memorized and then there are plenty more good practice problems in the texts.

I never went to seminars at all. Goldfarb will send out an update after the seminar with more notes and questions on topics that people were most asking about, so you will still get that benefit.

If you are struggling with understanding the notes and have questions of your own, it is probably worth going. If you understand the notes well enough on their own, you will pass.

[MNBridge]

Thanks MNBridge. Did you go to Goldfarb's seminar? Is it worthwhile going even if you have his notes.

Yes. And go to the seminar it is worth it.
Actually here's a test:
See How long it takes you to figure out Black Sholes formula from Brownian Motion fundamentals on your own. If you can easily do that then maybe skip the seminar, otherwise go.

**For those who say "But I don't have to be able to do that on the exam". My only response is, if you can memorize all the formulas without understanding the concepts behind them, more power to you. I can't. For me if I understand the fundamentals I don't have to 'memorize' anything cause it makes sense.

What value do you place on passing an exam? If it even marginally increases your chances why not go?

[quodlibet]

MNBridge and Semprini, Thanks for your good thoughts and advice.

[snafu]

I found the seminar very helpful.

I scored a 5 the first try with a very high pass score that session.

I absolutely killed it the second time.

One thing to keep in mind with Part 8 is that the overall preparedness of the candidates is very high for this exam. This is due in part to Goldfarb providing such excellent notes. It is also due to the fact that the exam material is mostly textbooks designed for teaching with a consistent format throughout the material instead of the usuall crappy multitude of papers designed primarily to pad someones resume. Since the competition is very high you need to know the material very well. You also need to practice good time management and be pretty fast in your problem solving.

I found very good value in the following general strategy
Learn the material
Obviously the most important key to passing. Goldfarb's manual and seminar are very helpful in this area.
Learn how to use the calculators
Get both the financial calculator and the blue calculator. Learn how to use the financial functions on the financial calculator. Read the calculator manuals. If you spend 10 hours of your study time just learning how to efficiently use your calculators then that is a well-spent 10 hours.
Practice efficient problem solving
When working through prior exam problems and end of chapter problems, first focus on solving the problem so that you learn the material. Then focus on efficiency. Is there an alternate method for solving the problem more quickly or with less chance of error. Don't just learn the material, learn how to quickly put a clear solution onto paper.
Look for ways to double-check your answers
For a lot of the problems you will need to know how to work there are more than one way of solving the problem. As you work through the prior exam problems look for ways to double-check you solutions as this can gain you lots of points.

There is no way to avoid learning the material. Once you have learned the material you can greatly enhance you ability to pass by practicing for the exam. You can practice being quick, accurate, and laying out your solution for clarity.

[Dooby Scoo]

Learn how to use the calculators
Get both the financial calculator and the blue calculator.


Anyone have specific model numbers on these calculators?

[Maine-iac]

Financial is the BA-35 Solar.
It does the bond calculations. You need this for Part 8.

For Part 8, it is sufficient, but you can use the TI one as well if you want to.
Can't remember the TI number off the top of my head.

[yoyo]

Regarding the calculators, the CAS lists three "BA" models. Is any one of them better than the others for Exam 8 financial calculations? The three models are BA-35, BA II Plus and BA II Plus Professional.

Thanks.

[Happy Salvador]

One thing not mentioned is the generally quality of the texts - if you like this sort of topic, the texts aren't bad to read. Some fun little tidbits and stuff keep you interested. And its nice having one big text that builds on its ideas (as opposed to random papers.)

Your experience may vary.

[snafu]

Learn how to use the calculators
Get both the financial calculator and the blue calculator.


Anyone have specific model numbers on these calculators?

For financial calculations get the TIBA II Plus - it does bond calculations, etc with the usual N, I, PV, PMT, and FV keys where you enter all but one of the values and it solves for the missing value. It is absolutely essential for this exam for the bond and other questions.

For general exam usage I am a big fan of the TI 30X II - it has parenthesis, editable equation entry, 5 variable, statistical functions. Most important for the exam are the parenthesis, editable equations, and variables. This allows you for example to do thinks like solve for the interest rate in an IRR or similar equation by trial and error very quickly - solve your guess for i to a variable, enter the equation using the variable, hit enter, read solution, change i, up arrow back to the equation, hit enter again, repeat until you have the answer.

The statistical functions are also great for quickly and error-free calculating a weighted average when you have lots of values. Enter 2-var stat mode. Enter the x's and y's into the stat data. Scroll back through to check for typos. Hit statvar sumXY and you are done.

[quodlibet]

Snafu recommended the TIBA II plus for financial calculations. What does the TIBA II plus do that the BA 35 doesn't?

[GefilteFish144]

Snafu recommended the TIBA II plus for financial calculations. What does the TIBA II plus do that the BA 35 doesn't?

I believe it has more memory storage banks.

[BigLarry]

The new BA II Plus essentially has a mini spreadsheet built in to it to do bond calculations. So basically you enter the statement date (in MM.DDYY format), the annual coupon rate (note: 5.5% is entered as 5.5, not .055), the redemption date, the redemption value (if redeemed at par you put in 100, as in 100% - if callable at 110%, you'd put in 110), the day count convention (Actual vs 30/360), the number of coupons (1 per year or 2 per year). You can then have the calculator determine the yield for a given price or determine the price for a given yield. In either case, the calculator will automatically calculate the accumulated interest so you can easily go from the clean price to the dirty price of the bond.

The BA-35 can also be used to price a bond, but it's a bit tougher. You have to turn all of the dates into day counts to get the accummulated interest where the BA II Plus does that all for you.

The biggest deal for those switching to the BA II Plus is to get used to the differences in conventions for bonds and normal ammortizations. For instance, on the BA-35, the interest rate that you enter is the periodic rate. For instance, for 6% annual compounded monthly, you'd enter .005 as the interest rate. On the BA II Plus, you put 6.0 in for the interest rate (I/Y = interest / year) and then there's a separate setting for number of payments per year, set P/Y to 12 and it breaks the annual rate down into the per period rate for you.

I hope this helps...

BigLarry

[quodlibet]

Thanks Big Larry. Just one more query regarding this: Any difference between the BA II plus and BA II plus professional. Is the latter a later/more advanced model?

[BigLarry]

I haven't used the Professional version, but here's what TI's web site says:

The BA II PLUS™ PROFESSIONAL includes all of the familiar financial features of the BA II Plus such as time-value-of-money, accrued interest, amortisation, break-even calculations and depreciation. It also features these extra functionalities:

Net Future Value (NFV)
Modified Internal Rate of Return (MIRR)
Modified Duration
Payback
Discounted Payback


Plus it's pretty, all silvery and shiny...

Good Luck,

Larry

[BigLarry]

One other comment... I agree 100% with SNAFU up above. While I recommend learning the BA II Plus (professional or not) for the financial calculations and for statistical calcs, I do not recommend it for regular calcs.

For regular algebraic calcs, I recommend the TI 30X IIs, which several benefits such as a 2-line display that allows you to quickly check your work and 5 memory locations that can be used in formulas.
~ if you store 23 in memory location A and then enter 3A, it'll calc 3*23. Of course, this can get much more involved - think perhaps of the quadratic formula - enter the test values for A, B, & C into memory and then type in the formula to solve for the root using addition in the numerator, then simply edit the formula and resolve to use subtraction in the numerator. This type of repetitive calc comes up often and the 30X IIs makes this simple, speedy, and it reduces the chance of a stupid error.

Now this does mean you'll have to practice with 2 calculators while studying, but that's really not a big deal. I use the 30X IIs for all problems except those of a financial or statistical nature. Also, be sure to bring a spare for each into the exam - you've invested several hundred hours into this puppy, don't pinch pennies at the end... You may look like a geek pulling out 4 calculators, but if you pass, who cares. I've brought as many as 6 calcs into an exam, but I'm a paranoid SOB.

Good luck,

BigLarry

[GefilteFish144]

The proctor has a spare calculator handy in case one conks out. I remember when I took 3B long ago I never bothered to bring a calculator (since the most complicated calculation on that particular exam was to compute a trade basis combined ratio). The proctor asked if anyone needed a calculator, so I just said what the hell and used his for the exam. (For maybe 2-3 problems.)

[Colymbosathon ecplecticos]

I wouldn't tell that story if I were you. The extra calculator is only for students that bring a calculator and have it fail. I believe that the rules are very explicit about this.

Violating the rules could get your exam ruled invalid. While it is unlikely that the CAS would invalidate your credentials at this point, on the basis of what you wrote I guess they could ....

And forever, when you sign a statement or are deposed, you will need to ask yourself, "am I really qualified?" as we all do, since you really shouldn't have credit for 3B (and hence, the corresponding conversion credit) at this point, what will you say?

No, not a good story to tell.

[GefilteFish144]

I wouldn't tell that story if I were you. The extra calculator is only for students that bring a calculator and have it fail. I believe that the rules are very explicit about this.

Violating the rules could get your exam ruled invalid. While it is unlikely that the CAS would invalidate your credentials at this point, on the basis of what you wrote I guess they could ....

And forever, when you sign a statement or are deposed, you will need to ask yourself, "am I really qualified?" as we all do, since you really shouldn't have credit for 3B (and hence, the corresponding conversion credit) at this point, what will you say?

No, not a good story to tell.

Amazing you reached that conclusion without knowing the circumstances. For one thing, I had told the proctor that I had forgotten my calculator. Also, I'm not sure if I passed 3B in that sitting, but even then, it didn't matter because I had lost credit for 3B in transition so all that didn't count anyway. Next time try to get your facts straight before going on the attack like that.

[Colymbosathon ecplecticos]

Calm down. Read what I wrote. I was just pointing out that if one happens to have gotten credit for an exam in error, one might be best served by not publicizing it.

[GefilteFish144]

Calm down. Read what I wrote. I was just pointing out that if one happens to have gotten credit for an exam in error, one might be best served by not publicizing it.

I did read what you wrote, and that's not what you said. But if you would consider forgetting a calculator as an offense punishable by invalidating an exam, then you have some serious issues to work out.

[Me3]

~ if you store 23 in memory location A and then enter 3A, it'll calc 3*23. When I use the memory like this it doesn't show the "A" in the formula bar, rather it shows the value that is stored in "A". This can get rather messy if you have several irrational numbers in the memory locations.

For example: Store the square root of 2 in "A", the sqaure root of 3 in "B", and the square rot of 5 in "C". Now create a formula that uses the memorized values, like 25*A*B*C which you would enter as:

[2][5]
[2nd][RCL][ENTER]
<move the cursor to "B">[ENTER]<move the cursor to "C">[ENTER][=]

You now have you answer, 136.9306394, but the formula in the line above is not as clean as "25*A*B*C" as you would imply rather it states:

25*1.414213562373*1.732050807569*2.2360679775

Now, I agree that being able to go into this formula and re-edit it is EXTREMELY convenient -- and I use the calculator like this all the time -- but if you could get it to read with the A, B, C's, please let me know how.

[snafu]

When I use the memory like this it doesn't show the "A" in the formula bar, rather it shows the value that is stored in "A". This can get rather messy if you have several irrational numbers in the memory locations.

For example: Store the square root of 2 in "A", the sqaure root of 3 in "B", and the square rot of 5 in "C". Now create a formula that uses the memorized values, like 25*A*B*C which you would enter as:

[2][5]
[2nd][RCL][ENTER]
<move the cursor to "B">[ENTER]<move the cursor to "C">[ENTER][=]

You now have you answer, 136.9306394, but the formula in the line above is not as clean as "25*A*B*C" as you would imply rather it states:

25*1.414213562373*1.732050807569*2.2360679775

Now, I agree that being able to go into this formula and re-edit it is EXTREMELY convenient -- and I use the calculator like this all the time -- but if you could get it to read with the A, B, C's, please let me know how.

2nd sqrt 2 sto-> A enter
2nd sqrt 3 sto-> B enter
2nd sqrt 5 sto-> C enter
25 memvar A memvar B memvar C enter
The formula in the line above is 25ABC and the result is 136.93
If you then change C to sqrt 4
2nd sqrt(4) sto-> C enter
uparrow uparrow to 25ABC then hit enter
result is 122.47 = 25*sqrt(2)*sqrt(3)*sqrt(4)

I use this all the time for solving stupid IRR problems for Part 8 and Part 9
For quadratics IRRs I find it less error prone and for cubics it is pretty much necessary. Just enter your equation such as 104*(1+A)^-3 + 4*(1+A)^-2 + 4*(1+A)^-1 - 99.3 or whatever, store 4% to A, solve, change guess for A, uparrow uparrow enter for new solution, iterate until it converges arbitrarily close (and yes I realize the above is easily solved using the financial calculator but it was meant as an example).

[Me3]

25 memvar A memvar B memvar C enter
SNAFU = Systems Normal -- All Fixed Up

Thanks so much!!