I’m having a confusion on tolerance bands.
if we have a corridor of 50% +/- 5% does this mean that our allocation should be between 45 to 55% or 47.5 to 52.5% … I’m sure I got this wrong but I’ve seen both in where they add the 5% as an absolute number and in other times increase the 50% by 1.05 or 50% by .95
Thanks!
akthem
June 20, 2018, 2:18pm
#2
Based on the CFAI website, it means between (50% x 0.95) and (50% x 1.05)
45% and 55%. No need for any fancy calculation, just add/deduct the percentage given as it is.
akthem
June 21, 2018, 10:02am
#4
na_27
June 21, 2018, 11:17am
#5
I think i am with akthem on this one. Although i cant recall a specific question, i always did what akthem mentioned, and never got it wrong.
Thiru, did you happen to see it done differently somewhere?
I think this post sums it up perfectly. My bad on the earlier post.
91692204
Eze
June 21, 2018, 12:25pm
#7
If taxes are involved the bands are larger as the 5% gets affected by the taxes.
Lets say your tax is 30% the 05 / (1-.30) = 7.143 for an allocation of 50% then it becomes .42857 to .57143
I’m sorry, but I’ve NEVER seen this anywhere. Could you cite your source on this?