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cm2 exam

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    Sep 21 Paper A Q5 ii)

    Hi there, I have a CAPM question. We are asked to find the return on Risky Asset C. In solutions you can work this out by two methods, Market Capitilisation Approach and the Security Market Line approach. Both yield different answers, the former being x=12.5, and latter being x=17. Am I...
  2. S

    April 2021 Q5 Paper A v)

    Another question related to April 2021 paper. In part v), it discusses the appropriateness of the quadratic function. I don't understand in the ASET solution how ' doing nothing yields a sure utility of 64.8181 whereas investing gives an expected utility of only 50' then suggests that 'the...
  3. S

    April 2021 Q1 iii) b - VaR

    I am getting confused in this question by how the Value at Risk is 800-730 = 70 I thought we are looking for the smallest payoff such that the probability of anything worse occurring is less than or equal to 0.5%. We know that P(Y < 750) = 0.518% > 0.5%, and P(Y < 730) = 0 (as the...
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