In the answers to the 2004 CFAI exam question #2, they say the Maclin’s willingness to assume risk is below average even though they say “they don’t want to experience a loss greater than 12% in any one year”. Can anyone tell me how this is considered below average willingness? I would have assumed it was average given the comment about 12% loss in any given year. I’m really struggling with these sorts of questions. thanks everyone!
CFAI is basing it’s answer of - They have been “unhappy” with the portfolio volatility they have experienced in recent years. If they had mentioned that they were happy with the volatility, but they would like to stick to 12% in any given year, the answer would mysteriously changed to average, I guess CFAI likes to play with the English language, a lot.
I see your point. I guess this is why this exam is so tough. I’m going have to learn to carefully watch the wording from now on.