• Author
Posts
• justinturner
Participant
• CFA Level 3
2

I have been working through practice problems and i always use 4 decimals prior to final answer and at least 2 decimals on final answer (ie money would have 2 decimals for cents).  On the schweser Mock (the 100 dollar online one) i just did even a more extreme example which I will copy and paste here:

FV = (1 + (0.08 (1 – 0.25)))12(1 – 0.4)(2.8) = 1.207(2.8) = GBP 3.4 million

3.4 million??????  It isn’t even close to 3.4 million.  More comical is the precision of the formula leading up to it and the 3 decimal 1.207 used.  The one i pasted is the written solution given, but even worse in the video solution where they write 3,400,000 (so not even the excuse of 3.379 rounding to 3.4 in this instance).

On the guideline answers for previous CFAI level 3 exams they never show cents anywhere.  This is quite difficult to wrap my head around considering the detail on steroids we encountered in level 2!

What are the rules for this?  Can anyone shed some light on this for me please?  Thanks