Reading 44, page 677, #5 Given a 15% control premium and and 25% discount for lack of marketability, the combined discount is _________? To compute the answer we need to compute DLOC, which is: DLOC = 1 - [1/(1.15)] = .1304 The combined discount is 1- [(1 - DLOC)(1 - DLOM)] = 1 - [(.869 )(.75) = .348 ~~~ok, I understand that~~~ Here is the question: page 683, questions #17 “the control premium paid … suggests a discount for lack of control of 20%. The discount for lack of marketability was estimated at 15%” ok, let’s do the same formula as above: 1- [(1 - DLOC)(1 - DLOM)] = 1 - [(.833 )(.85) = .2916 EXCEPT, THE ANSWER IS B, 32%… and this is how they configure the answer: 1 - [(1 - .20)(1 - .15)] = 32%… COULD THIS BE AN ERRATA? WHY DID THEY DO (1 - .20) INSTEAD OF (1 - DLOC)? ______________ This is how Schweser computes the answer: An analyst calculates a control premium of 15% and discount for lack of marketability (DLOM) of 20%. Which of the following is closest to the total discount for valuing minority equity interests in the private firm? Total Discount = 1 - [(1-.1304)(1-.2) = 30.4%

cursory thoughts… you’re already given both discounts. These discounts are in the form you need them in to be combined discount. the first example you gave had one premium and one discount, meaning the premium needed to be converted as you displayed.

I was wondering about that. However, the wording is so similar. Does anyone else have any feed back on those two questions? Many thanks in advance.