CFAI Book 4, Reading 44, Pg. 683, Q.17. In the answer they do not use the DLOC formula [1-(1/1+control premium)]. CFAI books state the answer as 1-(1-0.2)(1-0.15)=32% In Q5 they do use the DLOC formula to find the combined discount. Why did they leave out the DLOC formula for Q17?

Q17 gives the discount for lack of control and marketability. But Q5 gives the control premium and discount for lack of marketability. You have to calculate the discount for control from the formula you mentioned: [1-(1/1+control premium)] = discount for control Then use the 1-(1-0.13)(1-0.25)=34.8% formula to get the final answer.

What a surprise, I didnâ€™t read the question closely enough. Glad it happened now and not on the test. Thanks idreesz!

how does a illiquidity discount of 10% and a lack of contrl discount of 15% give a combined disocunt of 18%? can somebody help