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  1. Q9 Answer C For finding the odds for; without...

    Q9 Answer C

    For finding the odds for; without following the formula; we should think of odds for as
    Probability the event will occur : Probability the event will NOT occur

    => Probability that...
  2. Q8 Answer A First arrange the returns in...

    Q8 Answer A

    First arrange the returns in ascending order
    -10%, -5%, 2%, 3%, 4%, 7%, 8%, 10%, 12%, 18%

    Now we need to find the position at which we will get the 4th quintile.
    4th quintile is...
  3. Q7 Answer C Will the answer be the arithmetic...

    Q7 Answer C

    Will the answer be the arithmetic mean of the price for the 3 periods?
    Let’s find the arithmetic mean, which will be ($100+$125+$80) = $305/3 = $101.67
    Let’s try to build the...
  4. Q6 Answer B Rather than getting into...

    Q6 Answer B

    Rather than getting into complication, let’s work from basic reasoning.

    Let’s assume that you had invested $100 in the stock at T=0.
    Since the first year return is 100%, the...
  5. Q5 Answer A First Step: Find the semi-annual...

    Q5 Answer A

    First Step: Find the semi-annual yield
    Semi-annual yield = (1+EAY)^(1/2)– 1
    => Semi-annual yield = (1.05)^0.5 – 1 = 2.4695%

    Second Step: Multiply the semi-annual yield by 2 to get...
  6. Q4 Answer B Step 1: Assume the face value to...

    Q4 Answer B

    Step 1: Assume the face value to be $100, we would like to find out the discount at which the T bill is trading

    3.5 % = (D/100) * (360/120) => 3.5% = (D/100) * 3
    => D = 3.5% *...
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