I recall a post a few months back about rounding differences that are possible between CFAI text questions and what you will get using a calculator. I believe CFAI even makes note of this in their literature somewhere. HOWEVER, I am thinking I have missed something on the following problem b/c the rounding “error” seems to point to a wrong answer. The problem is in Reading 70 in Derivatives (“Options Mrkts & Contracts”) question number 11. The problem asks for the lower bound of a call option (American & Euro). The text gives the result of 5.63 (in both cases). The calculation/equation that CFAI shows to get to that number is: ($70-$65)/(1.05) rasied to the 0.2 power. Using the HP12-C, I get 4.95, NOT 5.63. This seems really far off for such a small number/answer. Am I missing something???
May be on the errata? Doesn’t look like there’s much they could round based on info above