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Black-Shcoles model

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Black-Shcoles model

  • This topic has 5 replies, 2 voices, and was last updated 10 years ago by AvatarJohn Moffat.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • January 26, 2016 at 1:35 pm #298009
    Avatarhermine
    Member
    • Topics: 26
    • Replies: 34
    • ☆☆

    In the study text it is mentioned to calculate d1 and d2 at 2 decimal places, but within the exam kit these are calculated to 4 decimal places. If we calculate at 2 decimal places during the exam, will this have impact on the marks?

    January 26, 2016 at 1:47 pm #298010
    AvatarJohn Moffat
    Participant
    • Topics: 57
    • Replies: 54839
    • ☆☆☆☆☆

    You can only look them up in the tables to 2 decimal places. As you will know from my lectures, I think it is best to calculate them to 4 decimal places, and then round after (because rounding d1 obviously affects d2).

    February 3, 2016 at 9:07 pm #299163
    Avatarhermine
    Member
    • Topics: 26
    • Replies: 34
    • ☆☆

    Yes I know, that in the tables the information os only to 2 decimal places. But in the answers of the exam kit, tha calculations are always to 4 decimal places, then recalculations are made in order to find N(d), something like extrapolation.

    e.g
    Question 40, part b
    d1=0.7314
    d2=0.1927

    N(d1)=0.5+0.2291+0.7x(0.2324-0.2291)=0.7314
    N(d2)=0.5+0.0753+0.3x(0.0793-0.0753)=0.5765

    I clearly understand this, but I want to know whether we need to do this during the exam in order to det full marks))

    February 4, 2016 at 8:37 am #299212
    AvatarJohn Moffat
    Participant
    • Topics: 57
    • Replies: 54839
    • ☆☆☆☆☆

    Oh now I realise what you are asking (although please don’t refer to a question just by a number without saying which book you are using 🙂 )

    No – there is no need to do that in the exam.
    In your example I would simply look up d1 using 0.73.
    What many of the answers do is approximate between 0.73 and 0.74 in the tables.

    If you had loads of spare time in the exam then that would be great. However given the time pressure there is no need to, and you won’t lose any marks.

    February 4, 2016 at 8:55 am #299226
    Avatarhermine
    Member
    • Topics: 26
    • Replies: 34
    • ☆☆

    Thank you very much!

    February 4, 2016 at 9:02 am #299233
    AvatarJohn Moffat
    Participant
    • Topics: 57
    • Replies: 54839
    • ☆☆☆☆☆

    You are welcome 🙂

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