They needed 9.4x% just to maintain the (real) portfolio value. I really think that’s a strong argument for a low risk tolerance.
> They needed 9.4x% just to maintain the (real)
> portfolio value. I really think that’s a strong
> argument for a low risk tolerance.
Take a look at 2006. The exam did the same thing. It asked for 2 reasons for below average ability and 2 reasons for above average ability and then circle overall ability. The guy needed a real return of about 5%. I don’t recall if inflation was given. He had no external income. He lived off his portfolio. He was 35. He had above average ability.
Further - their income didn’t cover their expenses. This is misleading. It covered their expenses when they lived with their parents. Going forward, they had a mortgage payment which becomes part of their living expenses.
The portfolio only needed to provide the mortgage. That was clearly stated in the case. Call it living expenses or call it a mortgage. The dollar amount is the same.
Below average infinity.
Ha ha - OK, I really don’t know at this point. I still think it is below, but I haven’t compared vs. the old cases, so you may well be right.
> Below average infinity.
> Ha ha - OK, I really don’t know at this point. I
> still think it is below, but I haven’t compared
> vs. the old cases, so you may well be right.
Yep, we won’t know until they release the exam in November and hopefully none of us cares anymore:) If I pass, I will never look at CFA exam material again!
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