In the Morning Session of Exam 3, Volume 3, Kaplan 2013 (case on Curt Westin), several liquidity needs are listed, a part of which are current. Some of the liquidity needs, however, belong to future periods (t+3, t+8), periods which are parts of another stages of the time horizon. My understanding was that only liquidity needs which belong to the current stage of life shall be considered in the return objective for the current stage. In the Westin’s case this has been treated differently.
I can understand that the future liquidity needs shall be taken into account today, but this somehow goes into controversy with explanations of other problems.
I will much appreciate any further views on this!
I am extremely confused by the Curt Westin return requirement question. Did the question mean to say “calculate the return requirement for the first year of retirement”? It asks for the current year and states retirement is 25 years away. So confused. I really think it’s a mistake on Schweser’s part but it’s not listed in errata, and surely someone would have brought it to their attention by now. Can anyone help me understand? Thanks in advance!
I wouldn’t worry about it. I’m only including immediate liquidity needs in the return calc on exam day. List it in the liquidity constraints.
This post was left unanswered back in 2014. I have similar reservations about the solution… Would really appreciate if someone can explain this very important concept pertaining to IPS return calculation.