Reduction Factor for non-runner

[EKK]

Hi,

I have several questions regarding reduction factor for non-runners:

Question 1:
I have seen an example where the reduction factor is 25% and the Price of the original bet is 8 (pre-reduction) - I have seen two different answers regarding the post-reduction price: 6.25 and 6 - which one is correct? What is the formula to get the reduced price?
PriceReduced = 1 + (P-1)*(1-RF)?
or
PriceReduced = P*(1-RF)?

Question 2:
In case of successive reductions: first runner removed at time t1 and second runner removed at time t2 (t2>t1).
Let's consider the following sequence of events:
1/ runner removed at t1 - RF1=25%
2/ I matched at trade at price P = 10;
3/ then a second runner is removed - RF2 = 45%
what is the reduced price of my matched trade?
What is the formula at a function of P, RF1 and RF2?

Question 3:
What about rounding for reduced price? Is it rounded up/down/nearest two decimals, not rounded?

Thanks

[betdynamics]

Betfair's own published rules state:

13.7 How the Reductions are applied for Exchange markets

In the win market, reductions will be made on the traded price.
For example: if the non-runner's final reduction factor is 25% the traded price on all previously matched bets on other horses will be reduced by 25% - traded price of 8.0 would become 6.0 etc. And these might be further reduced if another horse is subsequently declared a non-runner.

In the EW Market, reductions will be made on the traded win price. The advertised place terms will then apply to the revised win prices.
For example: if the non-runner's final reduction factor is 25% the traded price on all previously matched bets on other horses will be reduced by 25% - - traded price of 8.0 would become 6.0. If the each Way terms were 1/5th odds for 3 places, the corresponding price for the Place portion of the bet would reduce from 2.4 to 2.0.

In the place market, reductions will be made to the potential winnings on the bet only, and not the traded price.

For example: if the non-runner's final reduction factor is 25% the potential winnings on all previously matched bets on the other horses will be reduced by 25% - a traded price of 8.0 would become 6.25. For example a £10 bet on a horse to be placed at a traded price of 8.0 would provide winnings of £70. If there is a non-runner with a reduction factor of 25% in the race, that factor will be applied to the £70 of potential winnings leaving potential winnings of £52.50. Therefore the revised traded price will be 6.25.
The traded price may be further reduced if any other horse(s) is subsequently declared a non-runner, however odds cannot be reduced below 1.01.

Reserves: A reserve runner may appear in the relevant markets but will have a non-applicable reduction factor until Betfair has received confirmation that it is a confirmed runner, in which case an applicable reduction factor may apply to it.

For the avoidance of doubt, any reduction factor applicable to a non-runner replaced by a reserve, will be applied to all bets struck on the relevant markets, prior to the removal from those markets of such non-runner by Betfair. Likewise, should a reserve runner become a confirmed runner but subsequently become a non-runner, any reduction factor applicable to such non-runner will be applied to all bets struck on the relevant markets, prior to the removal from those markets of such non-runner by Betfair.

With regard to rounding, I believe that the odds can be rounded either up or down depending on the exact odds (I seem to recall that odds are calculated to 6 decimal places and rounded accordingly)