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Study Notes: Hull, Risk Management: Chapters 2, 3 & 4 For Question 3.16, shouldn't the survival probability of the man for Year 2 be calculated as (1 − 0.011046) × (1 − 0.011835) rather than 1 − 0.011046 − 0.011704 ? Please let me know if I'm missing something here. Thanks.

@David Harper CFA FRM Very helpful. Thanks! @brian.field @QuantMan2318 Thanks for your responses. I think I understand what you guys are getting at.

P1.T3. Financial Markets & Products, Reading 19 Hull, Page 79: “Normal backwardation” and “normal contango” refer to an unobserved relationship between the spot price and the expected future spot price. I believe it should be: "... unobserved relationship between the current forward/futures...

If X = strike price, the upper bound for a American put option is P <= X, which makes sense. For a European put option, you must add a time value component to the upper bound [p <= X*exp(-rt)] since you have to wait until the expiration date to receive proceeds from the sale of the underlying...

P1.T3. Financial Markets & Products, Reading 19 Hull, Page 92: PV of $6 coupon to be received after 122 days is: PV of coupon = 6*exp[10% × (122/365)] = 5.803 Should be a negative sign in the exponent since we are discounting.

@David Harper CFA FRM Very helpful, thank you!

The following passage is in the P1.T3.R19 Hull Financial Markets & Products Study Notes (Page 88): Shouldn't the full price equal the present value of its cash flows PLUS accrued interest? (Passage states that AI is not zero.)