B/Q1 2007 Exam - Ability to take risk

found it quite hard to judge. my initial view was, the only point support an above average answer is its long-term time horizon. but there are also factors support a below average ability to take risk. 1. both retired with min human capital 2. all they are relying on is the portfolio income to support living expenses 3. liquidity requirement also quite substantial almost 7.5% return yoy but the CFAI answer totally destroyed me, the donation and gifts are all convertable, and both of them may be able to take additional work… these flexibities are really out of the text provided by CFAI. anyone had any ideas to tackle these king of Qs? last, in terms of liquidity, do you guys think the liquidity requirement is relatively high or not? i would thought that’s not low… thanks in adv


yeah…I agree…above-average risk tolerance for the Ingrams is a stretch. I have no clue how to answer such kind of questions. Go with your gut feel and hope for the best!

thanks, but guess that’s way so many ppl failed without knowing why!!! this sucks

I don’t quite get this either…I would have picked below average here.

i totally messed up in this Q on the Risk tolerance and constraints .

Holy crap this question chewed me up, who the hell would have put above average, average seems more appropriate. And does anyone think that you should note that a highly undiversified risky portfolio is a unique constraints? And also I couldn’t believe they did not note the charity gifts (house gift and gift to charity and paul) in legal/reg or unique, and I didnt get that you didn’t have to gross up the 3 million by inflation, it said they wanted 3 mm in todays dollars in 35 years so won’t that be (1+i)^35*3000000? Anyhow I thought the rest of the test was pretty easy and scored myself out at 80ish, I know it may be inflated but I was consistently scoring myself out around 70ish on the past ones, only 06 and 07 I seemed to do markedly better at which makes sense. Ok good study day now I need a break.