hi,
i would like to ask regarding calculation on Dollar Duration Liab.
Pension Liab has PV $ 4 billion & Duration 14 years.
IMO DD = 4,000,000,000*14*0.01=560,000,000
why the cfai answer :
DD = 4,000,000*14 = 560,000 ?
thanks
hi,
i would like to ask regarding calculation on Dollar Duration Liab.
Pension Liab has PV $ 4 billion & Duration 14 years.
IMO DD = 4,000,000,000*14*0.01=560,000,000
why the cfai answer :
DD = 4,000,000*14 = 560,000 ?
thanks
bump…
anyone ?
Hi jounin83,
Yes, you are right. CFAI was a little sloppy on this answer. It says DD = 4,000,000 * 14 = 560,000 forgetting multiplying 0.01 on the left hand side and forgetting to mention that it is in units of $1,000 as in the table. Still, the answer is correct. Hope this helps.
Thank you Tokyo!