Do we need to know persistance factor residual income model?

Volume 4, page 490. There is a formula for persistance in RI. But not mentioned in LOS.

Do we have to know it?

Wow that’s a good catch! The LOS specfically says “explain” and omit’s the word calculate. If your in a rush, I would learn the factors that increase or reduce persistance.

It’s quite straightforward, just take a look again…it basically disounts RI depending on how persistent RI is expected to be.

It would not be appropriate to say calculate persistance factor, beause you don’t do that…it is given to you and you just plug it.