Studying for the CAIA Exam

01Sep08

Level I CAIA exams will be administered starting in about a week.  My test date isn’t until the 18th so I’m not freaking out completely.  Yet.

I’ve taken advantage of the long weekend to hit the books with a vengeance.  I wouldn’t say this is hard work.  Really, the level I learning objectives are fairly reasonable.  The downside: this one exam is the only chance I’ve got to prove that I know the material.  I’m sure CFA candidates go through the same thing, though the prep classes and literal herds of candidates probably help enforce some sort of academic rigor.

Setting off to earn the CAIA designation is probably going to be good for me.  It’s going to test my appetite for the practical, quantitative, and ultimately less sexy side of this industry.

The study material does continue to present alternative investments in a traditional manner, which is problematic.  I’ll give them some credit for including the odd caveat.  Usually something like: “by the way, using this model assumes normality of the data (which we know actually exhibits significant skewness and kurtosis).  You’ll also need to keep in mind all the returns are unaudited and subject to crippling reporting biases.  Oh, and this data was collected and analyzed over six years ago.”

Apparently what I’m supposed to do is take these outdated findings and prove that I understand models and industry research that have no application in the real world.  I can only hope that I’m capable of discarding this information as quickly as I picked it up once the exams are over.

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