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Thanks but you answered half of my question.
How -d1=0.0552 will produce N(-d1)=0.5219. while my answer is at 0.06 (0.0199+.5=0.5199)?
Why examiner gave N(-d1) in question requirement? Is there any logic for this?Dear Gabbi
The bonus has been calculated on the basis of the assumption that is half of normal payment. For example if you earn 1 dollar for one piece less then specified time , the time you saved and made additional unit which enhanced company’s contribution. This additional benefit has been shared to you in the following calculation.
For bonus first the normal time was taken for a piece i.e 40/60 then multiply basic rate 6 = 4 dollar for a piece. Next how much time you saved is 20/60. If you multiply this to basic rate 4 the answer will be 1.3333. Actually this bonus is a reward for time you saved for making each unit. It will reward the employee and motivate them to act more speedily and thus saving more time. the bad news is efficiency may be ignored which will generate complaints.Thank you for your help.
I am still confused.I know the unsystematic risk will not be asked by the examiner but i am still curious to know how to measure it. Leave the assumption in CAPM model that diversification in investment portfolio will reduce the unsystematic risk.At somewhere the measure of Unsystematic risk I learned is alpha. Then I learned the CAPM assumption. No further knowledge was gathered on alpha and its calculation. I believe that when the term (alpha) was introduced there might some calculations and concepts which can make the sense regarding unsystematic risk.
Kindly help me.P1 is quite easy to work on. You can easily clear this subject with self study. Theoretically both are same papers But P3 requires lot of practice application of different models. So depending on your study pattern P1 is easy but make sure it can not be passed without practice It has four areas you need to grip on but P3 totally different. I personally took classes for P3 but P1 was prepared on self study. As compared to P2 it has nothing similar. Only 1% calculation is required if examiner gives any table or figures. The non financial explanations are need to demonstrate of the financial figures given in the scenario.
