PAK?

[dwinko]

Anyone interested in a PAK?

[DudeMan]

In case you want to get started

B
D
B
D
E
A
D
B
B
B
E
C
B
A
B
E
E
C
C
E
B
D
B
B
D
D
C
D
A
B
B
D
A
A
A
A
A
D
C
B
C
A
E
B
D
B
E
B
C
A

[IcyBear]

you guys got to keep your exams? my proctor kept mine :(

[Trojan_Horse]

The instructions clearly told the proctor to let the test-taker keep the exam. The only thing the proctor needed was the answer sheet.

[dwinko]

Here are my answers:

2
4
5
3
1
4
4
2
2
2
5
3
4
1
2
5
5
3
3
3
5
4
2
2
4
4
4
4
1
2
1
3
1
1
1
1
1
4
3
2
3
1
5
2
4
2
5
2
2
3
:toast:

[DudeMan]

Anyone interested in a PAK?

We match on 38 of them, needing 35, i'd say we're both in the clear. Out of the 12 we don't match on, i think at least 6 of mine are correct.

[Wooducke]

I assume this is the PAK for the NEAS Corporate Finance course final on 3/14 ("pi" day). Here are my answers:

01)B
02)D
03)B
04)C
05)A
06)A
07)D
08)B
09)B
10)B
11)E
12)C
13)D
14)A
15)B
16)E
17)A
18)C
19)C
20)D
21)B
22)D
23)B
24)B
25)D
26)D
27)B
28)D
29)B
30)E
31)B
32)D
33)A
34)A
35)A
36)C
37)A
38)D
39)C
40)B
41)C
42)A
43)E
44)E
45)D
46)B
47)E
48)B
49)C
50)A

[Wooducke]

Here's the results so far from just the 3 of us:

W, D, G, Consensus
B B B B
D D D D
B E B B
C C D C
A A E A
A D A A
D D D D
B B B B
B B B B
B B B B
E E E E
C C C C
D D B D
A A A A
B B B B
E E E E
A E E E
C C C C
C C C C
D C E ?
B E B B
D D D D
B B B B
B B B B
D D D D
D D D D
B D C ?
D D D D
B A A A
E B B B
B A B B
D C D D
A A A A
A A A A
A A A A
C A A A
A A A A
D D D D
C C C C
B B B B
C C C C
A A A A
E E E E
E B B B
D D D D
B B B B
E E E E
B B B B
C B C C
A C A A

[Wooducke]

Did anyone else think that the test was kind of long for 2 hours? Some of those problems where you're computing the Variance of a portfolio of 3000 stocks took a while.

Also, I don't remember seeing the Variance formula in the book or them emphasizing it much on the homework, so I thought it was kind of weird they tested us about it on the exam:

Var[(1/3000)*('X1')+(1/3000)*('X2')+........+(1/3000)*('X3000')]= ((1/3000)^2)*(Var('Xi'))*(3000)+ 2*(1/3000)*(1/3000)*Cov('Xi','Xj')*(3000 Choose 2)

[jadedteacher]

Here's mine:
B
D
B
B
A
A
D
B
B
B
E
C
D
A
A
E
A
C
C
D
A
B
B
E
D
D
A
D
A
B
B
D
A
A
A
C
A
D
C
B
B
A
E
B
D
B
E
B
A
B

[DudeMan]

1 B 100%
2 D 100%
3 B 75%
4 C 50%
5 A 75%
6 A 75%
7 D 100%
8 B 100%
9 B 100%
10 B 100%
11 E 100%
12 C 100%
13 D 75%
14 A 100%
15 B 75%
16 E 100%
17 A,E 50%
18 C 100%
19 C 100%
20 D 50%
21 B 50%
22 D 75%
23 B 100%
24 B 75%
25 D 100%
26 D 100%
27 A 25%
28 D 100%
29 A 75%
30 B 75%
31 B 75%
32 D 75%
33 A 100%
34 A 100%
35 A 100%
36 A 50%
37 A 100%
38 D 100%
39 C 100%
40 B 100%
41 C 75%
42 A 100%
43 E 100%
44 B 75%
45 D 100%
46 B 100%
47 E 100%
48 B 100%
49 C 50%
50 A 50%

29 with 100% agreement
13 with 75% agreement

GraffixMan
38 with Dwinko
40 with Woodchucke
36 with Jadedteacher
38 average
44 PAK

Dwinko
38 with GraffixMan
36 with Woodchucke
34 with Jadedteacher
36 average
40 PAK

Woodchucke
40 with GraffixMan
36 with Dwinko
38 with Jadedteacher
38 average
45 PAK

Jadedteacher
36 with GraffixMan
34 with Dwinko
38 with Woodchucke
36 average
41 PAK

[Gusstache]

Here are the questions I deviate from the PAK:

#1 - Are you all sure? There is a sentence that says "investors expected the dividend when they bought the option..." I'd think it was built into the price.

#17 - E. It's gotta be the price when the call is worth something. The put is worth nothing.

#20 - C. It is not D. IRR for a lender is below the opportunity cost of capital, not the negative. They are the same for borrowers/lenders.

#27 - C. I'm not sure on this one.

#36 - C. I'm pretty confident on this.

#44 - E. I'm sure of this one. You can only use B-S for European options.

#49 - A. This was an exact copy of a practice problem. $54,000 is the answer.

Otherwise, I agree with the PAK.

[DudeMan]

Here are the questions I deviate from the PAK:

#1 - Are you all sure? There is a sentence that says "investors expected the dividend when they bought the option..." I'd think it was built into the price.

#17 - E. It's gotta be the price when the call is worth something. The put is worth nothing.

#20 - C. It is not D. IRR for a lender is below the opportunity cost of capital, not the negative. They are the same for borrowers/lenders.

#27 - C. I'm not sure on this one.

#36 - C. I'm pretty confident on this.

#44 - E. I'm sure of this one. You can only use B-S for European options.

#49 - A. This was an exact copy of a practice problem. $54,000 is the answer.

Otherwise, I agree with the PAK.


#1) that sounds like a good argument. If the stock pays a dividend, price goes down and call option goes down. Since the dividend is expected, the future price of the stock is expected to decrease. However, I don't recall 'expected future stock price' being an input parameter into option pricing.

#17) I agree, actually A and E tied on the PAK......I forgot to credit option E

#20) I still believe it is E. IRR is the break-even capitalization rate. If NPV is positive, then the IRR criteria considers the investment to be good.

#27,#36) I don't remember the question and am w/out my copy of the exam

#44) Was this the one where "the expected return is the risk-free rate"....if so, i chose that one. (thought i read it somewhere)

#49) I don't think i knew this one.

[Wooducke]

Here are the questions I deviate from the PAK:


#17 - E. It's gotta be the price when the call is worth something. The put is worth nothing.

Otherwise, I agree with the PAK.

I really feel that 17 is A.

I think I can remember this one:

A) The stock price was $50. so the put, with an exercise price of $60, is worth $10. The call is worth nothing.

E) The stock price was $80, so the put is worthless. The call has an exercise of $75 so the call's worth $5.

Answer A has a value of 10. Answer E has a value of 5.
A is the right answer.

[Wooducke]

Here are the questions I deviate from the PAK:

#1 - Are you all sure? There is a sentence that says "investors expected the dividend when they bought the option..." I'd think it was built into the price.




I wasn't entirely sure of that one. You may be right. This question kind of threw me as the first question on the exam. I almost changed it to "E" when I went back to look at my answers.

The reason why I didn't change it to "E" was because the current price is a factor in pricing a European call. If the price changes the call and put will change. You know: [call] + PV(exercise price) = [put] + [stock price]

[Gusstache]

I wasn't entirely sure of that one. You may be right. This question kind of threw me as the first question on the exam. I almost changed it to "E" when I went back to look at my answers.

The reason why I didn't change it to "E" was because the current price is a factor in pricing a European call. If the price changes the call and put will change. You know: [call] + PV(exercise price) = [put] + [stock price]

Yep...I was surprised by the question as well. I've seen the exact question without that sentence before in the practice exam (multiple times, I think). I don't think that one question is going to keep any of us from passing, though.

[DudeMan]

Results are out.......45 correct (44 PAK)

[Wooducke]

Woodchucke
40 with GraffixMan
36 with Dwinko
38 with Jadedteacher
38 average
45 PAK



I just got my result today and I got an 88 or a B+ so assuming there were no free points that most like correlates to a 44 on the exam. Since I had a 45 on the PAK there must be a least one wrong answer on the PAK.