Is it just me?.. Re: example 7, pg. 208 Vol 6…w/ margin can invest $50m, “solution” invests $25m long (@5%) and $25m short (@5%) but earns 10% on 50m?..I don’t get it. In the quiz (Ques.#14, pg 235, answer page A-23)…w/margin can invest $120m, goes 120m (@7%) long and 120m(@7%) short, earns 14% on 120m…this I understand. Is it just me, or does the “solution” for example 7 seem incorrect? Shouldn’t they invest 50m long AND 50m short to get 10% on 50m? Otherwise, wouldn’t they only earn 10% on 25m? (and not be as invested as they could be?)
I think I got my answer. I was referring to the 2009 curriculum and found that for the 2010 “Curriculum Errata” they deleted both the example (RS 73, example 7) and the question(#14) and stated that the material won’t be covered. So I guess it wasn’t just me.