Fall 2019 Q19 Operation Risk Premium Growth component
In Battle quiz, the formula for Operation Risk Premium Growth component is "(Risk factor) x (growth above 20%) x (DWP + AWP) / (1 + growth)" Why this question did not divided by (1+growth)?
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In Battle quiz, the formula for Operation Risk Premium Growth component is "(Risk factor) x (growth above 20%) x (DWP + AWP) / (1 + growth)" Why this question did not divided by (1+growth)?
Comments
its the same thing algebraically lol
Answer key: Component # 5 : 2.5% ∗ [(51,000 + 19,200)- 1.2 ∗ (34,000 + 12,500)] =2.5% * 14400
while using formula in Battle quiz:
g = (51,000 + 19,200) / (34,000 + 12,500) -1 = 51%
2.5% ∗ [(34,000 + 12,500) * (51% - 20%)] / 1.51 = 2.5% * 9500
they are different
You did it incorrectly. Numerator for the second formula should be 51,000+19200
for the same question, where is that 8.5% for CR(O) comes from?
Its just part of the formula for operational risk