CFAI Mock Afternoon Q10

[dkellman]

Question 10 on the afternoon portion of the CFA Mock.
Not too sure what I am missing, but the answer calculates the cost of the option to be $3.67m using the two period binomial model. How are they coming out with an answer of $3.2m for question B?

 

[RayJay]

check the errata. the answer is 3.67. 3.2 is misprint.

 

[fkcfa]

They updated it to 3.7 in the errata . 3.2 was wrong.
I hate their mocks. They are terriblely worded and those errors make you more confusing!

 

[dkellman]

Well there goes an hour of my time wasted. Thank you.

 

[a0e8523]

Hope they will not make such mistakes on real exam… Starting to doubt their reliability

 

[pass hungry]

Even in the errata they did not fully update the explanation. Notice the value of the stock at (-,+) is wrong also/still.
Separately, this question is tricky since they give you the probabilities of an up and down move calced by Wolters. I got suckered into using these instead of calcing my own.
It is worrisome that these errors must go unnoticed sometimes, it takes the masses going over them to shake them out