Auto ISO explained, I think...

I'm confused by your statement.  Can you please provide more details?

Otherwise, the way I am understanding it is you are saying the A77 will never open up larger than f/4 before ramping up the ISO if ISO and and aperture are not fixes (P mode, S mode).  If that is the case, then why do I get photos with auto apertures larger than that with my A77?

I'll have to double check, but I am pretty certain I have seen apertures close to the max aperture on my 35mm f/1.8 when in P mode or S mode.

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Paul