[iawit]

Originally Posted by niwsa

The entire question is based on movement within a week. And I cannot understand what you mean by no chance of aggregate summing upto zero- it is very much possible.

In any case, I do not see any need to further breakup into days/hours/seconds/ whatever. The possibility that a market does not move either upward or downward is very much possible.( to make the point clear, lets say the market is at some level say x now, it is very much possible that it is at the same level x a week later, what happens in the meantime is something we do not need to worry about, since that does not fall within the realm of this question).

P.S: I do think however the iims will go with 0.2 as the answer though.

i think u dint understand the context in which i made the statement.....the aggregate can sum up to zero....but the discussion was the case if the price of the mutual funds is calculated everyday....in that case, with an investment in the particular ratio mentioned, (i think 36% in B and 64% in C, i am not sure..) she cannot get a profit of less than .2% in any case and hence there is no chance of aggregate summing upto zero...but in the post b4 mine, ganesh said "Even if your assumption is right, there could be a chance that the aggregate of the 7 days mentionedby you could sum upto zero..." which is obviously wrong for the investment made in the particular ratio mentioned....hope this clears ur doubt....

[niwsa]

Thanks, that makes it clear.

In any case, whether people are arguing for 0.1 or 0.2 as the answer, I do not think they need to even consider what happens on a day to day basis as that simply is not within the realm of the question. The whole question is based on movement of the market in that week (as far as I can understand), and considering anything other than that is irrelevant to the answer of the question.

Just my opinions.

Originally Posted by iawit

i think u dint understand the context in which i made the statement.....the aggregate can sum up to zero....but the discussion was the case if the price of the mutual funds is calculated everyday....in that case, with an investment in the particular ratio mentioned, (i think 36% in B and 64% in C, i am not sure..) she cannot get a profit of less than .2% in any case and hence there is no chance of aggregate summing upto zero...but in the post b4 mine, ganesh said "Even if your assumption is right, there could be a chance that the aggregate of the 7 days mentionedby you could sum upto zero..." which is obviously wrong for the investment made in the particular ratio mentioned....hope this clears ur doubt....

[_vaibhav]

i think iim would have .2 as answer their answer. Otherwise (if the answer is 0.1) , there is absolutely no calculations involved in both the questions . :satisfie:

P.S. i havent attempted these question

[niwsa]

Agreed...those who have marked 0.2 have no reason to worry IMHO....at max, I hope they accept both 0.2 and 0.1 as answers, but I doubt if this woudl happen because they would have to accept tw oanswers for the question following this as well, and I very much doubt if they would accpet two answers for two of the questions.( it would just make their process of slecting candidates look less credible if 8% of the paper had two acceptable choices!! ).

Had this been a single question instead of a set of two, the chances of both answers being accepted would have been much better!

Originally Posted by _vaibhav

i think iim would have .2 as answer their answer. Otherwise (if the answer is 0.1) , there is absolutely no calculations involved in both the questions . :satisfie:

P.S. i havent attempted these question

[iawit]

Originally Posted by niwsa

Thanks, that makes it clear.

In any case, whether people are arguing for 0.1 or 0.2 as the answer, I do not think they need to even consider what happens on a day to day basis as that simply is not within the realm of the question. The whole question is based on movement of the market in that week (as far as I can understand), and considering anything other than that is irrelevant to the answer of the question.

Just my opinions.

ya u r right... but i think they will not consider .1 as the answer for 3 reasons:
1.The condition of what happens if there is no rise or fall at the end of 1 week was not mentioned in the question.They would have clearly mentioned it if they wanted us to consider that case.
2.The probability of the market returning to the exactly same value after a week, though not zero, is quite less and hence can be ignored, a fair assumption i think u can make, if u are interested in doing some mathematics and ensuring that one gets more than double the returns (.1% to atleast .2%)!!
3.They have mentioned in the question that "she wishes to guarantee maximum returns on her investment"

[niwsa]

I agree on point 1, and that is why I too feel they will consider 0.2 as the answer, even though I marked 0.1

But that is basically the point those who are arguing for 0.1 are also making-since they have not mentioned anything for the market remainingg stable, how can we be sure the 0.2 return is guaranteed ( 0.1 on the other hand is guaranteed in any situation as nothing is mentioned about rise/fall for A)

As for 2 I disagree- for the sake of argument, let us reduce the week to a single second- in that case would you agree that there is a fair probability of the market remaining at the same level?. The point is a week is just an arbitarary timeframe.... and we cannot/shoudl not use any external logic when we are solving a math question- just because it is a week, we can't say that the markets would never bee at the same level.

As for 3, the question asks for maximum guaranteed return which is different from "guaranteeing maximum returns". She cannot actually guaratee maximum returns since the maximum return is 5%( if I remmber correct) which can be obtained only by investing 100% in B, but that does not obviously gurantee the 5% return since there is a negative downside to it as well (-2.5 % if it falls).

But as I have mentioned in my previous posts, I do think IIM's will take 0.2 as the answer and the very best those who have marked 0.1 as answer can hope for, is if they accept both 0.2 and 0.1 as correct.

Originally Posted by iawit

ya u r right... but i think they will not consider .1 as the answer for 3 reasons:
1.The condition of what happens if there is no rise or fall at the end of 1 week was not mentioned in the question.They would have clearly mentioned it if they wanted us to consider that case.
2.The probability of the market returning to the exactly same value after a week, though not zero, is quite less and hence can be ignored, a fair assumption i think u can make, if u are interested in doing some mathematics!!
3.They have mentioned in the question that "she wishes to guarantee maximum returns on her investment"

[iawit]

Originally Posted by niwsa

I agree on point 1, and that is why I too feel they will consider 0.2 as the answer, even though I marked 0.1

But that is basically the point those who are arguing for 0.1 are also making-since they have not mentioned anything for the market remainingg stable, how can we be sure the 0.2 return is guaranteed ( 0.1 on the other hand is guaranteed in any situation as nothing is mentioned about rise/fall for A)

As for 2 I disagree- for the sake of argument, let us reduce the week to a single second- in that case would you agree that there is a fair probability of the market remaining at the same level?. The point is a week is just an arbitarary timeframe.... and we cannot/shoudl not use any external logic when we are solving a math question- just because it is a week, we can't say that the markets would never bee at the same level.

As for 3, the question asks for maximum guaranteed return which is different from "guaranteeing maximum returns". She cannot actually guaratee maximum returns since the maximum return is 5%( if I remmber correct) which can be obtained only by investing 100% in B, but that does not obviously gurantee the 5% return since there is a negative downside to it as well (-2.5 % if it falls).

But as I have mentioned in my previous posts, I do think IIM's will take 0.2 as the answer and the very best those who have marked 0.1 as answer can hope for, is if they accept both 0.2 and 0.1 as correct.

.1 is guaranteed because it is mentioned that "it promises a return of .1%" ...not because "nothing is mentioned about rise/fall for A"..

a single second is not comparable to a week....in any case "market remaining at the same level" is very different from market "returning to the same level after a series of ups and downs"...and probability of the market "remaining at the same level" for a whole transaction week is almost zero.....

it is clearly mentioned "guarantee maximum returns" in the question and i am sure about it..... but i think the wording could be clearer....something like "ensure as high returns as possible"

[niwsa]

I dont think you understood me currently- what i meant was the question says "it promises a return of 0.1%" not that " it promises a return of 0.1% irrespective of rise or fall of the market". If it was the latter, then it conclusively establishes that they want us to consider only rise/fall and ignore the stationary case.

As for your other point, it does not really matter whether the market rises or falls and then reverts back to the same level or remains at the same level always- as I mentioned previously itself, this really is irrelevant to the answer of the question.

And as for one second not being comparable to a week, this is a math question, and so IMHO, timeframes should not be taken in a strictly real-world sense.

Originally Posted by iawit

.1 is guaranteed because it is mentioned that "it promises a return of .1%" ...not because "nothing is mentioned about rise/fall for A"..

[cranium1]

well we can't really be sure abt these two question. Maybe .1 is right maybe it's .2 we can't be certain now. However one thing IS certain and it's a very sad thing, that world class institutes such as the IIMs allow mistakes like this to creep into their entrance exam!! This along with that DI question. It's really sad they can't even make 75 questions without ambiguity or errors. I know mistakes can happen but this is preposterous, our careers are on the line!! They should have been more careful, don't you think??

[gaurav.r.arya]

Originally Posted by cranium1

well we can't really be sure abt these two question. Maybe .1 is right maybe it's .2 we can't be certain now. However one thing IS certain and it's a very sad thing, that world class institutes such as the IIMs allow mistakes like this to creep into their entrance exam!! This along with that DI question. It's really sad they can't even make 75 questions without ambiguity or errors. I know mistakes can happen but this is preposterous, our careers are on the line!! They should have been more careful, don't you think??

well!!

It ain't a mistake....
The question is absolutely right..... with a definite answer.

Its the coaching institutes(even they agree wid .2) and us.... that aren't sure!!

.1 is the answer only when market doesn't move... I know its an assumption that market moves atleast once in the week... but honestly... has that or will that ever happen?

Thats why I feel its safe to say .2 is the answer (though this my point of view)...

However, .1 or .2 be the answer...... the question wasn't wrong according to me.... maybe the answer will be debatable.. but that may have the purpose of the question

while making calls and decisions later on - thru case studies or at work - we'll have few correct or wrong answer... it'll be a better or worse answer than what could have been.... its gonna be a shade of grey and not always black and white to choose from... this question being a perfect example of that.