CAS Exam Errata

Study Guide & Review Videos

Friedland Ch. 7 (1/9/25) – On page 319, the calculation of the 12-24 LDF for 2003 should be 1.36 = 16,116/11,850. On page 320, the simple average for the latest 5 years should be (1.33 + 1.31 + 1.38 + 1.34 + 1.36)/5 = 1.344. The medial average should be (1.33 + 1.34 + 1.36)/3 = 1.343.

Werner/Modlin Ch. 15 (1/28/25) – On pages 237-238, the numbers shown in the “Company Subject B/L Loss & Unlimited ALAE” columns are incorrect. Those are actually the “Current Company B/L Loss & Unlimited ALAE” figures. The correct figures (starting from the top) should be 41547, 15815, 43872, 16513, 46352, and 17267.

Werner/Modlin Ch. 4 (2/12/25) – On page 32, the total written exposures for CY 10 and CY 12 should be 0.50, not 1.00.

Werner/Modlin Ch. 8 (3/27/25) – On page 122, in the setup for the example, it should say “with data evaluated at 3/1/23.” On page 125, third column in the second table should be labeled “Age of AY at 3/1/23.”

Werner/Modlin Ch. 10 (3/27/25) – On page 150, the second bullet should say “…when modeling loss ratios since we don’t know how the loss ratio pattern should look.”

Werner/Modlin Ch. 10 (3/28/25) – On page 152, a clarification is needed around the chi-square test. It should say “if the Chi-squared p-value resulting from…”

Cookbook

Ratemaking – Risk Classification: Pure Premium Approach (3/17/25) – In Step 6 of the PDF, the values for the % Change with Off-Balance are incorrect. See the Excel version, which shows the correct values.

Ratemaking – Aggregating Exposures (1/5/25) – In Step 2, the description should say: “policy cancelations will record a negative partial exposure for the portion of the policy canceled for the policy year of the policy effective date.” We fixed this.

Past CAS Problems

Spring 2019 Q #6 (4/16/25) –The problem states to assume 100% of taxes as fixed and 75% of general expenses as fixed, but the solution switches the two and makes general 100% and taxes 75%.

Spring 2014 Q #8 (3/18/25) –The overall percent change of the adjusted-exposure-weighted average should be calculated based off the current and proposed overall changes. See the example in the Cookbook.

Practice Problems

Problem Set 1 Q #7 (4/3/25) – The tail factor in the solution should be 1.04, matching the problem. This is fixed.

Problem Set 5 Q #3 (4/3/25) – This can also be solved without the 100-250k LAS, solving more directly. We updated the solution to show both approaches.

Problem Set 2 Q #1 (3/17/25) – There was an Excel formula reference mistake. The AY and PY totals should sum the entire column. This is fixed.

Flashcards

Werner/Modlin Ch.11 (2/20/25) – On the “Coinsurance Formulas” flashcards (flashcard 19), the definition of L should be “amount of loss after deductible.”

Practice Exams

Practice Exam 3 Q #18 (4/17/25) – For parts a and b, we should be applying the ECR to the on-level earned premium for 2024 (not 2023).

The Exam 6 (US) Course is currently on pause.

Study Guide & Review Videos

Brosius (12/2/24) – Typo on pages 24 and 26. The formula for the slope “b” should show bar(x^2) – bar(x)^2 in the denominator.

Mack Chain-Ladder (12/7/24) – Two typos on page 129 in the AY 2023 SE calculation. The ultimate loss (C_4,4) should say 322, not 403. Also, in the final term, it should be 1/304 + 1/260. The calculated SE is correct as shown.

Meyers (12/11/24) – On page 317, all of the “5” subscripts should be replaced with “10.” The calculations are correct as shown.

Shapland (12/20/24) – See typos below:

• Page 188 – Last cell of hat matrix should say f_1,3, not f_3,1
• Page 192 – In Step 11, central estimates should be called point estimates
• Page 206 – Final bullet under GLM bootstrap model should say that each parameter set is used to calculate future incremental values
• Page 224 – Under normality plot, theoretical quantiles are on x-axis and observed data are on y-axis. Also, Shapland’s plot is not a 45-degree line (just a diagonal line) since axes on different scales

Hurlimann (12/20/24) – On page 9, S_ik should be labeled as incremental losses.

Verrall (12/20/24) – On page 363, when describing the impact of beta, it should low/high confidence in prior mean, not parameter estimates.

Clark (12/20/24) – On pages 111-113, the expected losses should say 3,541, not 3,451. All calculations are correct as shown.

Sahasrabuddhe (12/31/24) – On page 264, the losses for AY 1 at development period 1 should say 396,132. All calculations are correct.

Brosius (1/4/25) – Two typos. On page 25, the output of the LINEST function in the third bullet from the bottom should be (0.96781, 6023.70787). On page 35, the denominator of the boxed formula should be bar(X^2) – bar(X)^2.

Clark (1/4/25) – Typo on page 98. The total SD is sqrt(488^2 + 2,100^2) = 2,156.

Mack Chain-Ladder (1/17/25)  – On pg. 144, the 50% CI should be (-0.275, 0.275). We also re-recorded the explanation of the 50% CI in the video. Using a narrower CI allows us to better detect existing correlation in the triangle.

Friedland (1/17/25) – Clarification: On page 50 (second bullet from bottom), the formula for the proportion ceded per policy should be (PL – RL)/PL.

Teng & Perkins (1/17/25) – Typo on page 293. When defining the net insurance charge, the second part should say “expected gain to the insurer caused by the minimum…”

Shapland (2/3/25) – Typos:

• Page 188 – Formula for phi^H should have r^H in the numerator, not r
• Page 191 – In Step 9, the calculation shown should say 117.82 = 1.61*sqrt(101.61) + 101.61
• Page 202 – Formula for q*(w,d) should have abs(m^z_w,d) under the square root. This was actually fixed back in December but we had not posted an errata yet

Clark (2/3/25) – On page 93, the “l” at the top is referencing the log-likelihood itself (well technically, an equivalent version of the log-likelihood for the purposes of maximization), not the derivative of the log-likelihood. We must set the derivative of “l” to 0 to solve for the MLE estimates of mu_i.

Sahasrabuddhe (2/3/25) – On page 269, when calculating the ultimate losses using the adjusted factor, the 3.392 should be 1.138.

Venter Factors (2/3/25) – On page 162, for clarity, the formula for f(d) under the CC method should have h in the denominator rather than h(w). But recall that h = h(w) for CC.

Brosius (2/12/25) – On page 34, under Development Formula 1, answers are provided to Hugh White’s question related to Cov(X,Y) and Var(X). The words “Budgeted Loss Method” and “Link Ratio Method” are misleading. Instead, when Cov(X,Y) < Var(X) and CoV(X,Y) > Var(X), the change in reserve is similar to the Budgeted Loss/Link Ratio methods since they decrease/increase. We have removed those words from the guide for clarity. Same for the video.

Meyers (2/12/25) – Typos on page 317 in the CCL example. It should say log mean mu_2,10 = 7.7895 and log SD sigma_10 = 0.0244. Also, the log mean for AY 2 is mu_2,10 = alpha_2 + beta_10 + rho(log(C_1,10 – mu_1,10).

Taylor & McGuire (2/26/25) – The standardized Pearson residual on page 347 should be 0.524, not 0.506.

Sahasrabuddhe (2/26/25) – On the bottom of page 275, the denominator of the F_i,j^X derivation should be “1 – R_j((0 – 2.5M), (0 – 5M)).”

Teng & Perkins (2/27/25) – The final slide on Feldblum’s enhancement incorrectly described how expected future loss emergence was calculated for PYs 2021 – 2022. The video has been corrected and reposted to align with the study guide.

Taylor & McGuire (3/10/25) – Typos on pages 348-349. On page 348, it should say, “Under the ODP Mack Model, … ~ ODP((f_j-1)X_kj,…). On page 349, the final entry in the third column of the X matrix should be 0.

Friedland (3/31/25) – Typo on page 53. Under catastrophe reinsurance, the word “restatement” shows up twice. It should say “reinstatement.”

Meyers (3/31/25) – On pages 318-319, we describe the skew normal distribution in two formulations. Technically, the second formulation shown is not a skew normal distribution. Instead, it is its own distribution, known as a mixed lognormal-normal distribution. It is the one used in the CIT model.

Teng & Perkins (3/31/25) – Typo on page 288. In the example, it should say that the first retro premium booking occurs 27 months after policy effective dates.

Mack Chain-Ladder (4/3/25) – Clarification on page 124. When discussing the problems with the normal distribution, the study guide has se(R)/R > 50% next to the bullet on skewness. Instead, it should be next to the bullet on negative CI limits, since se(R)/R > 50% will cause R – se(R)/R < 0 for a 95% CI. This portion of the video was re-recorded to clarify this. We also re-recorded the Examples video (around the 13:44 mark) where we briefly discuss the CoVs.

Cookbook

Shapland – Heteroscedasticity Fix: Standard Deviation (4/6/25)  – In the problem, the Std Dev for column 1 should be 2.46 not 2.75. For the standard deviation of residuals calculations, the zero corner residuals should be included.

Marshall – Risk Margin (3/24/25)  – Under derivation of sigma^2, the boxed formula should be sigma^2 = ln(1 + phi^2). There was a typo showing phi^2 = ln(1 + phi^2).

Brosius – Caseload Effect (3/18/25)  – In step 4 appears the credibility formula should include (1-Z) X E[Y] not (1-Z) + E[Y].

Meyers – Changing Settlement Rate (CSR) Model (2/23/25)  – [PDF Version] In step 1, the equation shown should use should + not +-.

Meyers – Correlated Chain-Ladder (CCL) Model (2/23/25)  – [PDF Version] There is typo on the outer parentheses for the formula in the problem mu(w,d) where w>1. The parentheses should include mu(w-1,d).

Sahasrabuddhe – LDFs at Basic Limits (2/23/25)  – [Excel Version] The prompt asks for LDFs at the AY 2015 cost level; it should say 2023. The PDF version is correct.

Shapland – Standardized Pearson Residuals (2/3/25)  – In Step 7, f^H(w,d) refers to the Hat Matrix adjustment factor.

Marshall – Risk Margin (2/3/25)  – [Excel Version] In the Discussion section showing the External Systemic Risk table, the total column should be calculated based on both the Social Risk and Event Risk column.

Siewert – Service Revenue Asset (1/27/25)  – [PDF Version] In Step 5, the “Loss Excess of Agg” for Account C should be 0, the output from Step 3, and the “Ult Excess of Agg” should be 127,266. These are typos in the table. The rest of the work and calculations are correct. We fixed this.

Verrall – Bayesian BF Method (1/27/25)  – In Step 2, the formula for E[x_i] should be E[x_i] = alpha_i / beta_i. The denominator shouldn’t be squared. We fixed this.

Brosius – Least Squares Method (1/27/25)  – In Step 2, the order for the inputs to the Excel formulas for SLOPE and INTERCEPT should be reversed: e.g. SLOPE(Ultimate Loss Ratios, Undeveloped Loss Ratios)

Venter Factors – Goodness of Fit (1/15/25)  – [PDF Version] The denominator of the Adjusted SSE for the Chain Ladder method is shown as 10-8. It should this be 10-4. The calculation and all the other work is correct though. We fixed this.

Brosius – Caseload Effect (1/8/25) – In the Excel file, there is a mistake in the boxed VHM formula (same as the one below). The calculations are correct and we updated this.

Brosius – Bayesian Credibility in a Changing System (1/5/25) – In Step 2, the VHM formula is incorrect. The standard deviation of Y should be in the parenthesis, not the variance. It should be VHM = (E[X/Y] * 𝜎(Y))^2. We fixed this in the PDF and Excel.

Brosius – Least Squares Method (1/5/25) – [PDF version] In step 6, the calculation for the 2023 LDF should have a numerator of (20.1%+66.2%+28.4%). It was shown incorrectly, but the LDF calculation, 1.607, and all the work is correct.

Mack Chain Ladder – Calendar Year Test (1/5/25)  – The boxed formula for Var(Z_j) had a mistake. The final term should be E[Z_j] – E[Z_j]^2. All the work and calculations are correct though. We fixed this in the PDF and Excel.

Venter Factors – Correlation of Development Factors (1/5/25)  – The boxed formula for the T statistic had a mistake. The numerator in the square root should be (n – 2). All the work and calculations are correct though. We fixed this in the PDF and Excel.

Practice Problems

RF Taylor – 4 & 10 (3/30/25) –  The reference development date for phi should be the same as the one for f from the model.

RF Verall – 6 (3/18/25) –  In part b, the credibility formula should show phi instead of rho.

RF Venter Factors – 4 (1/15/25) – The second IncLoss value in part a should be 14,550, corresponding with AY 2014 at 24 months.

CAS 2011 #1 (1/5/25) –  The graph in the solution for part c has the link ratio and least squares method pointing to the wrong lines. We fixed this.

Friedland EP #10 (3/31/25) – On Essay Problem #10, the word “restatements” should be “reinstatements” in the question and the answer.

Meyers EP #8 (3/31/25) – In Essay Problem #8, you are asked to describe two formulations of the skew normal distribution. But technically, the second formulation is not actually skew normal. Rather, it is its own distribution (the mixed lognormal-normal distribution).

Flashcards

Friedland (2/4/25) – The first flashcard was missing words for “regulators.” It should say that regulators require sound reserves to appropriately evaluate an insurer’s financial position.

Shapland (3/21/25) – The steps listed on the Simplified GLM card (page 16 of the standard PDF) were incorrect. The card and deck have been reposted.

Friedland (3/31/25) – On pages 21-22 of the standard PDF, the word “restatements” should be “reinstatements.”

Formula Sheet

Brosius – Caseload Effect (3/18/25)  – The credibility formula should include (1-Z) X E[Y] not (1-Z) + E[Y].

Meyers – Correlated Chain-Ladder (CCL) Model (2/23/25)  – There is typo on the outer parentheses for the formula in the problem mu(w,d) where w>1. The parentheses should include mu(w-1,d).

Study Guide & Review Videos

Fisher Ch. 3 (10/3/24) – Just a quick clarification for the hybrid approach on page 238. The words “aggregate loss ratio” are misleading. This is not an actual loss ratio. It’s the aggregate losses divided by the expected losses as noted in parentheses.

Bahnemann Ch. 6 (10/3/24) – On the bottom of page 299, the AL premium should say $888, not $666.

Mahler (9/9/24) – On the top of page 25, the Method 4 probability should be 3/3, not 4/4.

Fisher Ch. 3 (8/30/24) – In the second step on page 230, the second balance equation should show “367.5k – H” in the numerator, not “336k – H.” Since making this correction leads to a non-sensical basic premium, we had to revise a few inputs to the example. The minimum premium was revised to $250,000. The 1.65 – 1.69 entry ratios were revised to 1.55 – 1.59 with charges of (0.176, 0.173, 0.171, 0.168, 0.167). This leads to a revised net insurance charge of -$2,100 and a revised basic premium of $17,690. We have reposted the guide with these changes.

Fisher Ch. 3 (8/30/24) – At the top of page 250, the excess ratio should be 0.79, not 0.21.

Bahnemann Ch. 5 (8/30/24) – On page 295, the reference to the Poisson distribution in the example at the bottom should be removed. On page 293, the “1.10”s in the numerator of the average untended claim size should not be there. On page 289, the example should say “attachment point of 3,000 and a layer limit of $5,000.”

Bahnemann Ch. 6 (8/30/24) – At top of page 308, the first bullet should say “with non-risk-loaded ILFs.”

Fisher Ch. 1 (8/19/24) – On pages 162 and 164, the claim 1 value should be $1,500 instead of $1,150. We will upload a corrected video soon.

Fisher Ch. 3 (8/19/24) – At the bottom of page 226, the second property should say phi(r) approaches 0 as r approaches infinity.

Bahnemann Ch. 6 (8/19/24) – Per the text’s official errata, the following formulas need to be adjusted: 1) the numerators at the bottom of page 304 should not include the (1+u) factors and 2) the risk load formula at the top of page 308 should not include include (1-F_X(a)) in the denominator. We will upload a corrected video soon.

NCCI Circular – Retro Rating Plan (8/10/24) – The updated study kit was made available by the CAS in the last few weeks. Material changes were made to the NCCI Circular – Retro Rating Plan. The informational exhibits and plan updates were removed, and a bit more detail was added regarding the retrospective development premium. The video has been updated as well.

NCCI – Experience Rating Plan (8/5/24) – The video’s description of interstate vs. intrastate risks was flip-flopped. It has been corrected and reposted.

NCCI – Experience Rating Plan (7/29/24) – On page 180, the final calculation for the manual rate is incorrect. The manual rate should be based on the estimated payroll for the policy period (2.5M for class 005 and 10M for class 2589). This changes the solution of the standard premium to $186,698. This video has been corrected as well.

GLM 2 (7/25/24) – On page 50, the formula for the fitted value of the 35-year-old unmarried driver has a typo. It should say “330.30 x 33.115 x 1 = $10,938.”

GLM 5 (7/25/24) – On page 87, there is a typo in the first paragraph. It should say “The linear fit over-predicts for low building ages, under-predicts for middle building ages, and over-predicts for high building ages.”

GLM 6 (7/25/24) – On page 100, under the formula for the scaled deviance, it should say “where ll_saturated and ll_model are the log-likelihoods for the saturated model and the model being evaluated, respectively.” The video has been corrected as well.

Fisher 3 (7/25/24) – On page 226, there is a typo in the third property of the “five important properties of phi(r) and psi(r).” It should say “psi(r) goes to infinity as r goes to infinity.”

Mahler (7/21/24) – At the bottom of page 14, the total EP should be $54M, not $56M. This changes the final chi-squared test statistic to 2.60824. The conclusion is the same. The video has been corrected.

GLM 6 (7/21/24) – On page 105, the “negatives” in front of the AIC & BIC figures should not be there. The video has been corrected.

Couret & Venter (7/17/24) – On page 33, in the second sentence, it should say “Under WC coverage, insureds retain losses…”

Mahler (7/17/24) – At the top of page 29, for the second scenario, the 2024 estimate should be 0.50(0.023) + 0.10(0.062) + (0.40)(0.0345) = 0.0315. The video has been corrected.

Fisher Ch. 3 (7/15/24) – On pages 229 & 243, there is a typo in the first balance equation. The numerator should say “(e + E)T – H” instead of “(e – E)T – H.” The videos have been corrected.

Cookbook

NCCI – Experience Mod (8/26/24) – For claim 4, both the primary and excess loss portion need to be reduced by 70% (multiplied by 0.3). This wasn’t done for the primary loss (Cell E90).

ISO – Experience Rating (8/23/24) – The formulas for ISO Rule 15.C are updated for clarity in the discussion section and some more detail is included to explain how the adjustments work.

NCCI Circular – NCCI Retro Prem (8/10/24) – We updated this for the 2024 study kit to include the Retro Development Premium.

Fisher Retro – LDD Premium (7/24/24) – I noticed an error in the LDD Premium formula in the Excel version. The step 5 formula should use the same formula from step 4 for the LDD loss cost. We fixed and re-posted an updated version. The PDF version and formula summary are correct.

Problem Bank

GLM 2-4 #11 (10/15/24) – As a note of clarification, see GLM (pg. 38):
For a GLM, model complexity is measured in terms of degrees of freedom, or the number of parameters estimated by the model-fitting procedure.

RF Bahnemann – 17 (9/24/24) – The total loss and claim count numbers weren’t internally consistent with the claim size ranges. We fixed the data in the table. The methodology and approach is the same.

RF Couret & Venter – 3 (9/12/24) – The ELF was incorrectly multiplied by the expected ground-up loss. ELFs should be multiplied by the Standard Premium (unless a problem states otherwise).

RF GLM 2-4 – 12 (9/3/24) – I modified the question for part a to exclude the intercept in the design matrix, similar to how it’s shown in the paper (pg. 13). Technically, the design matrix that the GLM fits to includes a column for the intercept (with a 1 for all records).

For part b, the number of parameters is 8. The intercept is itself a parameter.

RF GLM 2-4 – 9 (9/3/24) – For part b, the paper (pg. 33) seems to conflate the response variable and explanatory variables. In statistical modeling, the response variable is the dependent variable, which is the target variable.

RF Bahnemann – 20 (8/29/24) – The v in the denominator of the pricing formula incorporates the variable expenses plus the load for profit and risk (see page 164 of the text). The risk-loaded ILFs reflect the different amounts of risk load for different limits, with higher limits having higher risk loads.

I modified the problem slightly to break out the variable expenses from the profit load and risk load in the basic limits premium for clarity.

RF Bahnemann – 17 (8/29/24) – The total loss for the 5000-10,000 group should be 168,400.

RF Bahnemann – 10b (8/22/24) – The formula shown in text to the right of the answer should have E[X; a + L] – E[X;a] in the denominator. The answers are correct as shown.

RF Fisher Exper – 6 (8/20/24) – Minor: Given the evaluation date, policy period 2024 shouldn’t have been in the table. We modified the problem slightly to change the evaluation date and adjusted the LDF headers to correspond.

RF ISO – 4 (8/20/24) – I modified the wording of the part a prompt for clarity. Also, there was a mistake in the ARULL calculation. The calculation missed the first year by mistake.

Secondly, the BLEL calculations referenced the wrong Sales years and the new policy was meant to be an occurrence policy. I fixed that. I also added some more clarity in the wording/discussion since we’re solving for the standard premium for the policy being priced, so at policy limits.

RF Bahnemann – 10c (8/10/24) – Part c is faulty. You can’t state definitively one way or the other. We do know that the inflation rate for the excess layer would be larger than either the ground-up severity (5%) or the capped insured layer (3.3%).

NCCI Circular Problems (8/10/24) – We updated these problems for the 2024 study kit to include the Retro Development Premium.

RF Bailey – 4  (8/7/24) – We updated the problem prompt and discussion for clarity and to explain how this problem relates to Table 3 in the paper.

Flashcards

Bahnemann Ch. 6 (8/30/24) – On Flashcard 19 (page 39 of the standard PDF), the first sentence should say “with non-risk-loaded ILFs.”

Bahnemann Ch. 6 (8/19/24) – Per the text’s errata, the (1+u) factors were removed from the derivatives on Flashcard 13 (page 26 of the standard PDF). In addition, the (1-F_X(a)) factor was removed from the denominator of the risk load on Flashcard 19 (page 38 of the standard PDF).

NCCI Circular – Retro Rating Plan (8/10/24) – The updated study kit was made available by the CAS in the last few weeks. Material changes were made to the NCCI Circular – Retro Rating Plan. The informational exhibits and plan updates were removed, and a bit more detail was added regarding the retrospective development premium. We updated the NCCI Circular flashcards to align with the updated study kit.

High-Level Summary

Bahnemann Ch. 5 (10/25/24) – The Pareto variance formula should show alpha*beta^2 in the numerator. This is shown correctly in the study guide and formula summary.

NCCI Circular (8/10/24) – Updated for the 2024 study kit to include the Retro Development Premium.

Past CAS Problems

CAS 2017 Q15 (9/23/24) –  The solution incorrectly described a SIR policy for 150k-600k as 600 xs 150 SIR, but it should be 450 xs 150 SIR.

CAS 2019 Q11 (9/17/24) –  Part c was updated to correct the calculation of the efficiency test statistic using manual and standard loss ratios rather than the mod.

CAS 2013 Q19 (9/12/24) –  In part a of the solution, it should say XS ratio instead of Loss Elimination Ratio.

Practice Exams

Exam 1 – Q #23 (9/26/24) –  The Med-Only calculations were incorrect. They should be split $1,200 and $0 for the 11/4/22 claim and $2,100 and $4,200 for the 2/14/21 claim. This is updated.

Exam 1 – Q #18 (9/30/24) –  The excess ratio for $100,000 should have been explicitly given in the problem. Also, the problem should ask for the “modified expected loss” for clarity since the schedule rating is used as well. Q #15 and Q #18 used to be part of a much larger problem together and we split them into different problems this year, but missed the excess ratio used in Q #18.

Exam 2 – Q #21 (10/3/24) –  In the latest table from the study kit, E[N] = 74 corresponds with Expected Claim Count Group ECG 37 (not 74). We updated the problem to include the Limited Table M values for ECG 37 to solve the problem correctly.

Study Guide & Review Videos

Clark (1/5/25) – On page 20, the third bullet should say “R/IV = 57%” instead of “(R+L)/IV = 57%.”

Mildenhall Ch. 4 (2/4/25) – On page 108, it should say “If p = 1 – 1/n,” rather than “Since F(x) = p = 1 – 1/n.” The “p” here incorporates frequency and severity, not just severity. The video will be updated as well.

Mildenhall Ch. 4 (2/12/25) – In the Ch. 4 video, when the n-year occurrence PML is defined, it still says “at least 1/n.” This will be revised to “at most 1/n” to align with the study guide (this is incorrect in the textbook).

Brehm Ch. 2 (2/26/25) – On page 286, in the second to last bullet, economic margin is incorrectly described as the return above the cost of capital. It should just refer to economic margin as the “profit margin.”

Panning (3/3/25) – On page 263, under the “Advantage,” it should say “seek to reduce the duration of the firm’s total economic value by…”

Mildenhall Ch. 5 (3/17/25) – On page 127, the bid-ask spread should be defined as rho(X) – (–rho(-X)). Then, in the example below the definition, the final spread should be rho(H) – (-rho(-H)) = rho(H) – (-rho(C-1)) = rho(H) + rho(C) – 1 = 0.316 + 0.95 – 1 = 0.266 > 0. The definition of the bid-ask spread will be corrected in the video as well.

Brehm Ch. 2 (3/24/25) – On page 282, the marginal decomposition of the exponential moment has a typo. The “r'(X_j)” should be replaced with E[X_j * e^(cY/E[Y])]. This will be corrected in the video as well.

Cookbook

Mildenhall Pt 2 – Classical PCPs (2/9/25) – The PDF version shows a typo in the semivariance formula. The squared should be outside the parenthesis instead of inside squaring E(X):

E( (X-E(X))^2 where X>= E(X) )

Practice Problems

RF Bernegger – 2  (11/25/24) – The data in the table didn’t exactly sum to a 100% probability. We fixed this.

High-Level Summaries

Mildenhall 14-15 (4/7/25) –
The unit premium formula using risk adjusted expected proportion of recoveries has a typo. At the end of the formula should be g(S) but it just has S. It has been fixed.

Clark (12/20/24) – On page 3 of the Clark summary, the ELF formula has a ‘U’ in the numerator instead of an ‘L’. It has been fixed.

Flashcards

Mildenhall Ch. 8 (1/22/25) – On page 24 of the standard PDF, the fifth reason should say “…technically insolvent…”

Clark (12/16/24) – On page 48 of the standard PDF, there was an “U” in the subscript of the ELF that should not have been there. It has been removed.

Panning (3/3/25) – On page 26 of the standard PDF, under the “Advantage,” it should say “seek to reduce the duration of the firm’s total economic value by…”