R1 - BSC

mtl

Hey, so I just wanted to clarify on the "Notes on the BSF term" in the Wiki.
The overall formula in the wiki is R1 = BC + BSC + ACC.
From there, the wiki has: BSC = [BSF -1] x BC

First question:
re: "If (bond count) > 1300 then BSF is set to 0."
Should this be 1 (or refer to BSC instead of BSF?) As it is, you get BSC = [0-1] x BC = -BC, which seems counterintuitive?

Second question:
re: "In general BSF = sumproduct [ (# issuers, weights) / sum(# issuers) ]"
Should the denominator be outside of the sumproduct formula?

graham

Yes, you're right on both counts. I've corrected the wiki. But I also noticed I did something slightly different to Odomirok.

• Odomirok defines the Bond-Size-Factor as the average bond size minus 1
• I defined Bond-Size-Factor simply as the average bond-size-factor. Then I subtract 1 before multiplying by the Bond Charge.

That makes more sense to me, but it may be confusing since it's different from the source text. The text actually says the bond-size-factor = 0 if number of bonds > 1,300 so that's where I got that from, but in my notation, it's really that BSF = 1 so that (BSF-1) = 0. (Nobody else has mentioned that discrepancy to me.)

jasonchw

Do i need to recite the weight for BSC for exam?

Staff - AC

If they ask you to calculate the bond size charge, they may expect you to know the weighting scheme for the bond size factor.

marodriguez

Similar to Jasonchw's last question...will we be expected to memorize the individual RBC factors for each asset value subject to basic charge? Or will these always be given on the exam...
For example, memorize cash & eq. has RBC factor of 0.003 to calculate R1?
-Mrod

graham

If I were creating the exam questions, I would not require candidates to memorize the RBC factors but part (b) of the following exam problem DID require you to have memorized the factors related to the calculation of R4 and R5:

• https://battleacts6us.ca/pdf/Exam_(2016_1-Spring)/(2016_1-Spring)_(26).pdf

Note however that this was the only published exam question where they did not provide the factors within the question. My guess is that they WOULD give you the factors so that you didn't have to memorize them but I can't be 100% certain.

Trick: If you aren't given the factors, a way around it just to use something "generic" like 0.05 for all factors. You won't get the correct numerical answer but at least you can finish the problem and you would probably only lose 0.25 pts for using the wrong factors.