Christine Ross
-----Original Message-----
From: Chris Heim [SMTP:chrisheim@email.msn.com]
Sent: Monday, April 26, 1999 2:24 PM
To: CAS Part 10
Subject: Butsic Inflation 1997 Question
It seems to me that the question (#24) posed on the 1997 exam concerning
Butsic's inflation paper is internally flawed. From the information given,
it is easy to determine that
P = 40 and
Pd = 34.34 (using 8%)
u is given as .04. This must equal (W-P)/W to give W = 41.66
thus V = W - Pd = 7.32, but v does not equal the 20% given in the question.
Instead it equals 0.1757 = 7.32/41.66.
Did I miss something?
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