Something Makes 2010 Exam IPS Question So Hard For Me

CFA Level III
#1

Link to question: http://www.analystforum.com/forums/cfa-forums/cfa-level-iii-forum/91343435

  1. The expenses of $96,000 are considered “real” by default, and have to be grossed up to be netted from the pre-tax income. When do you need to do this? Normally you divide real return by (1-tax rate) at the end, but here you have a calculator-input method wherein you compute future I/Y, so it is tricker.

  2. Her liquidity requirement is the $50,000 in a year for her kid. What about also listing her $3,000,000 annuity she needs to buy in 25 years? Isn’t that a “liquidity requirement” too?

Something about this question gives me the willies.

#2

Expenses in 20+ years aren’t liquidity needs. Liquidity needs are near term needs or ongoing expenses

#3

what about the TDA contribution that she intends to make within the year? why is that $12k not included as a liquidity requirement?

#4

liquidity refers to her portfolio. the 12k savings is not coming out of her portfolio. its said that i know exactly the problem youre talking about just form seeing the 12k savings