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# BSM Model d1 and d2 and finding applicable z score

#### Tim_Rogers

##### New Member
I have two questions concerning d1 and d2 as inputs to the BSM model.

1. I have read in other sources that in the exam you will not likely be asked to calculate d1 and d2 but instead be provided with these as inputs for the BSM calculation. That said you will need to look up the applicable z score in the cumulative z table, so this is the test. Please confirm if my understanding is correct.

2. When looking up the z score I find that its not always so straight forward as simply choosing the number from the correct column then moving to the correct row. So when the d score fits between any of the columns ie 0.7326 as this number fits between .03 and .04 on the rows. Therefore should you round up to then obtain the z score of .7704 or round down to obtain the z score of .7673.

#### Nicole Seaman

Staff member
Subscriber
I have two questions concerning d1 and d2 as inputs to the BSM model.

1. I have read in other sources that in the exam you will not likely be asked to calculate d1 and d2 but instead be provided with these as inputs for the BSM calculation. That said you will need to look up the applicable z score in the cumulative z table, so this is the test. Please confirm if my understanding is correct.

2. When looking up the z score I find that its not always so straight forward as simply choosing the number from the correct column then moving to the correct row. So when the d score fits between any of the columns ie 0.7326 as this number fits between .03 and .04 on the rows. Therefore should you round up to then obtain the z score of .7704 or round down to obtain the z score of .7673.
@Tim_Rogers

1. This question has been asked and answered many times in the forum, and we even have a post in the FAQ section of the forum: https://www.bionicturtle.com/forum/...-are-formula-sheets-provided-answer-no.10545/. I found this quickly by using the search function in the forum.

2. There are a lot of discussions in the forum regarding z scores so you may be able to find the answer to your question by using the search function. If you are not able to find an answer, I'm sure someone will be able to help, but we always want to make sure that you search the forum first before posting to make sure that your question has not been answered already.

For reference, here are a couple of links that are helpful to new members of the forum:
Thank you,

Nicole

#### David Harper CFA FRM

##### David Harper CFA FRM
Staff member
Subscriber
Hi @Tim_Rogers In regard to question number (2), If the lookup shows N(0.73) = 0.7673 and N(0.74) = 0.7704, but you want N(0.736) then the FRM expects you to know how to interpolate: N(0.736) ~ 0.7673 + 60%*(0.7704 - 0.7673) = 0.7691 because (0.736-0.730)/(0.740-0.730) = 60%. That's how I think about the longer form: N(0.736) ~ 0.7673 + (0.736-0.730)/(0.740-0.730)*(0.7704 - 0.7673) = 0.7691. Thanks!

#### Tim_Rogers

##### New Member
@Tim_Rogers

1. This question has been asked and answered many times in the forum, and we even have a post in the FAQ section of the forum: https://www.bionicturtle.com/forum/...-are-formula-sheets-provided-answer-no.10545/. I found this quickly by using the search function in the forum.

2. There are a lot of discussions in the forum regarding z scores so you may be able to find the answer to your question by using the search function. If you are not able to find an answer, I'm sure someone will be able to help, but we always want to make sure that you search the forum first before posting to make sure that your question has not been answered already.

For reference, here are a couple of links that are helpful to new members of the forum:
Thank you,

Nicole
Nicole, thanks I will do so in future.