Can someone explain to me why the data in part i) of question 3 of April 2022 have been added 0.05% each before multiplied with the pdf to find the expected value? Is this some kind of continuity correction?
Hi Constantinos, Yes - it is a form of continuity correction based on a continuous distribution of returns (eg for Asset B, since the CDF between -30% and -29% was 0.04%, it is assumed that the return was -29.5%). However this was not explicitly stated in the question, so if you had used the whole numbers as per the Q3 data you would also have received full marks. Alvin.
