It’s a foundation IPS question where return requirements are 2% opex, 5% spending. 2.75% inflation, since 2% and 5% are annual real spending requirements, it seemed that they would be liquidity requirements as they’re actual cash outflows and within the year. However, the answer says “No specific liquidity needs are given. A modest cash equivalent reserve is reasonable if desired”.
Why would these not be considered liquidity needs?
Question 2B from 2017 Volume 1 Morning Exam 3 is GIPS. Question 3A is Endowment IPS, but they didn’t include the spending requirement or op.ex. % in the liquidity requirement.
I could have sworn one of the questions I did had opex and spending requirements in the liquidity section, but can’t remember where that would be or if I’m just conflating info.