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  #1  
Old 12-17-2010, 03:19 AM
actuary0123 actuary0123 is offline
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Default Can Do Mining - Task 2

Since there is a new FA, I thought I will start the threads for others to comment.

Last edited by actuary0123; 12-17-2010 at 03:25 AM..
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  #2  
Old 12-20-2010, 12:55 PM
jadedteacher jadedteacher is offline
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Hi guys, I'm getting stuck on Tasks 2 and 3. I think these questions are ok to ask. Any help would be greatly appreciated!!

1) On Task 2, when it asks for the "decision-making process", is it really asking for the criteria for determining what it optimal from the client perspective? The steps I'll take to find that optimal # of assays/minimum to mine is just trial and error with the macro, as far as I can tell (but I may be wrong).

2) Is Task 3 kind of similar to Task 2, only less technical/more general (more geared towards client eyes even though it's an internal memo)? I know we're recommending actual values, which we weren't in Task 2, but aside from that, we're talking about the decision making process still, arent we?

Please help!
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  #3  
Old 12-20-2010, 01:36 PM
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knucklesma610 knucklesma610 is offline
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Task 2 seems more like they want you lay out the process and Task 3 is perform the process
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  #4  
Old 12-20-2010, 04:27 PM
Ramanujam Ramanujam is offline
 
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I am getting counter-intuitive results on Task 2. As the number of assays are increased, every one of the risk measures gets worse: mean, std deviation, VaR, CTE, % end < 0. In other words, 1 assay gives far better results than 2 assays, and so on. I am not seeing a graph where VaR or CTE measure decreases with the count of assays. Can anyone please comment on this?
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Old 12-20-2010, 04:35 PM
actuary0123 actuary0123 is offline
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Do the same at a different minimum to mine value
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Old 12-20-2010, 05:29 PM
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Passacaglia Passacaglia is offline
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Yeah, you just have to do the minimum to mine and the number of assays together -- you can't do one, then the other. If you keep the minimum to mine as 0, you'll always mine, and the number of assays you conduct is just throwing money away -- the assays help you determine whether you should mine, and if your minimum to mine is 0, you're going to mine no matter what.

HOWEVER, you're answering Task 3 here. Read the assignment for Task 2 again, and don't do what it tells you to do in subsequent tasks -- just do what it says to do before that.
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Old 12-21-2010, 09:25 AM
jadedteacher jadedteacher is offline
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Caveat: This is a really stupid question.

In the spreadsheet, is the "mean" the assets at the end of 20 years? If so, is it in millions?
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Old 12-21-2010, 09:36 AM
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Passacaglia Passacaglia is offline
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No stupid questions -- you can always blame the poor writing of the assessment!

Yes, the mean is the ending cash value at the end of 20 years -- that is, the average ending cash value, out of 1000 simulations run for the assumptions in that column. Yes, it's in millions.
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  #9  
Old 12-21-2010, 11:13 AM
jadedteacher jadedteacher is offline
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Thank you so much Passacaglia! I do think it's ironic that we're being graded on "effective communication" given the clarity of the assignment.
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Old 12-21-2010, 12:41 PM
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I hate to throw a curveball in here, but I can't figure out what kind of method we should be using to determine the number of assays to use or min. to mine.

I did notice in G12 that the formula they're using to determine the decay from assays is N(.945,.01). It says it should be N(.945, .02). Am I missing something in the reading that this is right? After running a few scenarios, the results seem a bit more intuitive using the N(.945, .02)
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