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Size-dependent χ(3) of water-soluble thiol-capped CdTe quantum dots (QDs) in nonresonant region has been examined by Z-scan and degenerate four-wave mixing experiments. Two-photon absorption cross section as high as 104 GM was observed for 4.9 nm sized CdTe QDs. Both imaginary and real parts of χ(3) were found to increase with QD size. Compared with the bulk CdTe semiconductor, 30 times enhancement of nonlinear figures of merit defined by Re χQD(3)/Im χQD(3) was found for 3.1 nm CdTe QDs in nonresonant excitation. [ABSTRACT FROM AUTHOR]