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CT8 Sept 17 Q1(ii)

M

mavvj

Ton up Member
The examiner report establishes second order stochastic dominance in (b) by integrating the "cdf"s for the three assets. However as the distribution is discrete shouldn't this be a summation rather than an integral? Do you lose 2 marks if you do a summation rather than an integral as the same conclusion is still reached?
 
You are correct, this is a discrete distribution so the cdf's are therefore a summation and not an integral. This is sloppy notation in the examiners report. As for whether you are marked down for giving the right answer using the right method, that is entirely up to the examiner!

A nice question to start the paper though, guaranteed 10 marks if you get one of these (providing the examiner is skilled enough to mark your answer correctly)
 
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Does anyone know how the examiner arrived at the answers given in the report? I thought it had to be added up too.
 
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