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How do grade thresholds work?

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Okay, im a little confused on how this works. Does it like push up our percentage that are printed out in the transcripts?

For e.g.
The grade thresholds for paper 1 chemistry A is 28/40. Lets say somebodys mark is 37. How does grade thresholds affect this mark? Will the marks be counted as 40/40?

Another example, if somebody just got 28/40, will this person have an 80% mark for his paper 1?
 
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