Use of goalseek in algebraic profit tests (paper A)

[James M]

Hi,

I'm looking at September 2020, paper A question 10 which is an algebraic profit test solving for a premium. My approach to this was to treat the question as a "regular" profit test using a notional premium and perform the calcs in Excel. Once all set up, I used the goalseek functionality to find the premium that gave a total EPV of 0, which matches the final answer in the solutions.

The solutions take a more traditional approach and set out equations in terms of P which are then solved, and there's a fair few marks for solving these equations. Would I still receive full credit for my approach? I've shown working where appropriate and added some narrative about exactly what I did using Goalseek, but obviously there's not really a way to document this any more clearly.

Thanks

 

[Joe Hook]

Hi James,

I think that will be fine. At the time it was the first paper A taken at home and the examiners may not have expected students to answer it in this way and so did not mention it in the examiners report. Therefore, we can't be certain it would gain full credit. However, it's doing the same job as setting up an equation to solve and so I think as long as you provide sufficient detail of the methodology (and they haven't explicitly ruled this approach out in the question) then you should get full credit.

Joe