I still don’t know why choice A is correct. I do understand that these 3 risks are present in general but are we not supposed to answer the questions based on the case?
I think it should be C because the case explicitly says that assets has NONCALLABLE bonds. If that is the case, there should not be any contingent claim risk.
I am almost getting a panic attack now.
Thanks
Assets are non callable, but question states various risks associated with liabilities.
This is a typical CFA question, where you can easily answer your own question… I speak from experience of being trapped rather than being smart!
Thanks. I reread the question and this is just a weird trap.
They keep going about funding hostipal liabilities and its fully funded status. They also mention non callable bonds in the assets.
And then they ask about risks faced in fundining liabilities giving one an impression that they are talking about funding hospital liabilities.
Is there any trick to find this kind of a trap? I don’t think even a very superior knowledge of English language can help here.
Hope there are not many of these on Saturday.
Good luck to all.