Writing out Formulas

Hi guys,

do you think it’s necessary to write out the formula in the exam and then plug in the numbers?

Or will you just write out your calculation?

Thanks,

I personally think writing out the formula is a waste of valuable time. The questions say “show your calculations”. But if you think you have the time, and/or it helps you make sure you plug in the numbers properly, then it can’t hurt. I probably won’t be doing it.

I would disagree. I think it does anchor you / remind you. But also if you plug in the wrong numbers but show the right formula you have a higher chance of earning partial points.

So this is how calculation questions are graded.

you get points for having the #s in the right spot. point for the correct answer and point for labeling the answer correctly.

“buy 10 equity contracts at $100,000”

" 5% real gdp growth" or

" real gdp growth = (calculation) = 5%"

you don’t get points for writing out the formula itself, and even if you write out the formula itself and plug in the wrong numbers you lose that point.

the only good thing from a formula is to make sure you got the right numbers where they suppose to be. But it’s a trade off to time.

Hmm I hadn’t thought about labels. What about something simple like a Foundation’s required rate of return? Surely they wouldn’t hold back a point for not writing “the required rate of return =” would they?

for those you’ll have to label the components and label what’s required vs desired (if asked). Unless the question is direct and says what is the required rate of return.

Basically the graders don’t assume anything. but numbers and stuff can be matched to reading. But if you just say buy contracts and the reading has equity and fixed they don’t know which one you are trying to buy, of course unless specified in the question.