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**CFA Practice Question**

You wish to rank n different securities according to the deviation of the market price from your estimate of their intrinsic value. You are curious how many different ways this can come out. The counting method you should use is the ______.

A. permutation rule

B. multinomial formula

C. binomial formula

**Explanation:**The factorial method allows you to determine the number of ways of arranging n things. Initially, there are n choices for the first item, then n - 1 for the second, and so on. The number of combinations is therefore n! = n x (n - 1) x (n - 2) x (n - 3) x ... x (1). That is: nPn = n!/(n-n)! = n!.

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**User Contributed Comments**
8

User |
Comment |
---|---|

chuong |
How do we define the concept of permutation rule? Is it including factorial and permutation formular? please help! |

tanyak |
number of ways of arranging n when the order of n matter - because there is talk or ranking the data |

takor |
deviation of the mrkt price from estimate of intrinsic values suggests rank/order of data |

LIEJON |
If r objects selected with regard to order (ranking), use PR |

dcsmith |
i hope u guys all pass this exam :) |

mrpman |
got a 79% overall without weighting any areas, got a 78% ranking. I ran through Schweser mock exams before which gave me a great knowledge, i also took notes on them. They prepared me for these tests, which seem a lot more difficult than the schweser mock exams. Hopefully the real test is more like schweser |

ashish100 |
dayumnnn mrpman.. good score. I got 71.5% for the overall score. and 67% ranking. Im gonna set my benchmark at getting atleast 80% on the rest of the AN mocks now. Ty for the motivation. |

pigletin |
I got 17% ranking and still passed the level one |