Assets and Liabilities of the Implied variety...

CFA Level III
#1

Do they increase or decrease for a certain couple?

#2

Yeah what was that all about? Does anyone even remember reading that in the curriculum?

#3

Had no clue on this. Made up some b/s.

#4

I said implied assets went up because the value of their portfolio grew significantly and the implied liabilites increased because now they were going to leave $$ for their sons. Sounded good at the time

#5

Hmm interesting thought in the liability side. I looked at it from debt free aspect but increase on asset side is right

#6

i had sbugrad89’s answer as well.

#7

eriqnoodle Wrote: ------------------------------------------------------- > Hmm interesting thought in the liability side. I > looked at it from debt free aspect but increase on > asset side is right i had this perspective as well

#8

I believe I went with increase for all 3. The liabilities increase for the bequest. The assets increase due to performance (and 0 liquidity requirements of the portfolio) The risk tolerance goes up due to the expectation of continued outperformance.

#9

I think the risk tolerance goes up because they are looking to fund secondary goals and those can always be cut back… While they are expecting a greater return they are putting in greater liabilities so it was a wash… But up for all 3…

#10

There it is! I couldn’t think of a good reason to put down. So I went with expectations. Close enough.

#11

Risk Tolerance confused the hell out of me because their age was at 70, but I went with up because they were ‘set’.

#12

Said implied liabilities went down because the inheritance is a desired goal and not a required goal, therefore it’s not an actual liability. of course i have NO idea what “implied liabilities” means, but i think the answer seemed too easy and that they stress desire goals in the CFAI text.

#13

I have no idea what the implied part meant. So I went for increase of assets, decrease of liabilities since they have no fixed (interesting thought about the bequest though, pretty good point that I didn’t think of) and increased risk tolerance.

#14

I put the risk tolerance is the same because Patricia’s willingness to take is is still below average. but I am not sure…

#15

eriqnoodle Wrote: ------------------------------------------------------- > Hmm interesting thought in the liability side. I > looked at it from debt free aspect but increase on > asset side is right Same answer for implied assets and liabilities, didn’t think about bequest. Risk tolerance increased, as it had mentioned that they are willing to maximize their portfolio value, which I felt they can do by taking more risk.

#16

jeks Wrote: ------------------------------------------------------- > eriqnoodle Wrote: > -------------------------------------------------- > ----- > > Hmm interesting thought in the liability side. > I > > looked at it from debt free aspect but increase > on > > asset side is right > > i had this perspective as well had this too.

#17

implied assets up; implied liabilities down (i looked at it from the debt free aspect plus i think they were fairly soft on the language around the “would like to leave a bequest”. And because assets are up, and liabilities are down, i said risk tolerance was up because of the increased discretionary wealth due to the movement in assets and liabilities as previously mentioned. It sure sounded good when i wrote it.

#18

I thought implied assets related to the PV of savings from future labour income. Since they were retired, no change. It’s in reading 20 on discretionary wealth.

#19

jeks Wrote: ------------------------------------------------------- > eriqnoodle Wrote: > -------------------------------------------------- > ----- > > Hmm interesting thought in the liability side. > I > > looked at it from debt free aspect but increase > on > > asset side is right > > i had this perspective as well i think it was greater asset, lesser liab and thus higher risk tolerance to leave a bequest.additionally bequest is not a liability

#20

fitrangnn Wrote: ------------------------------------------------------- > I put the risk tolerance is the same because > Patricia’s willingness to take is is still below > average. > > but I am not sure… Agree. Willingness almost always trumps ability. They didn’t day they felt like they had enough for retirement only that the asset returns performed better than expected No change in risk tolerance