Hi there! I compared my answer to the Examiner’s Report. The two markers gave me respectively 7.5/12 and 4.5/12. But I cannot find any error in my answer to warrant such harsh marking—the only error I made was not squaring my standard deviation to arrive at a variance. I know it is somewhat tedious, but this has been driving me crazy, I cannot see how I lost so many marks. Please can someone just help me look at it and let me know. It is also vital for when I rewrite that I know what was so important that I left out. Thank you so much! I have copied my solution below. Here is a link to a photo of their solution, so that it isn’t tricky to find the ER. https://share.icloud.com/photos/01b3rq_GjjU9GGE_ceUlahSVw Q5 ii) a) by independence EV = 500*E[(Iti 1)*(I+i 2)*(1+i 3)*.. *(Iti 15)] =500*1.035^15=837.6744153761 variance: (Iti 1)*(I+i 2)*(1+i 3)*...*(Iti 15) = prod(t=1, t=15):[1+i_t] =log(prod(t=1, t=15):[1+i_t]) = sum(t=1,t=15): [log(Iti_t)] since {¡ t} are independent: sum(t=1,t=15):[log(Iti_t)] ~ N(15*м, 15*0^2) prod(t=1, +=15):[1+i_t] ~ logN(15*M, 15*6^2) var[prod(t=1, t=15):[1+i_t]] = exp(2*15*0.0342+15*0.0193)* (exp(15*0.0193)-1)= 1.2512457763 500^2*1.2512457763=312 811.444075 sd = sqrt(312 811.444075)= 559.295489053 b) 500*1.04^10 = 740.1221424592 EV= 740.1221424592*1.005^5*0.15+ 740.1221424592*1.01^5*0.25+ 740.1221424592*1.045^5*0.4+ 740.1221424592*1.07^5*0.2 =884.8333 let X = value of the investment at time=15 years variance = E[X^21 - E[X1^2 E[X^21 =(740.1221424592*1.005^5^2*0.15+ (740.1221424592*1.01^5)^2*0.25+ (740.1221424592*1.045^5)^2*0.4+ (740.1221424592*1.07^5)^2*0.2 =793430.1 variance = 793430.1 - 884.8333^2 = £^2 10 500.13121111 = (£102.4701479023)^2 sd=sqrt(variance) ~= £102.47
Hi Eitan I understand your frustration. Unfortunately, it's not possible for us to comment on the marking of specific exam scripts. Sorry