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I have 2 doubts
1. For report questions, do we have to leave some pages for the written part and then do calculations shown in appendix or can I start with the appendix on first page and then write report in the later pages?
2. Why can’t the bank deposit rate be considered as a risk free rate?
1. It does not matter whether the appendix is first or it is at the end. Just make sure you head up your pages properly (“report” or “appendix”) so that the market is not confused.
2. If there was no information about the interest rate then you would assume it to be risk free. However that is extremely unlike in the exam – if relevant you would almost certainly be given the interest rate.
Deposit rates in practice will always be different from the risk free rate – the banks want to make a profit 🙂
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