Tolerance bands

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!

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.

https://www.analystforum.com/forums/cfa-forums/cfa-level-iii-forum/91322973

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

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?