Just doing Level III 2009 AM paper. One of the questions (q2) asks about whether an individuals implied assets and implied liabilities have gone up or down.
Is this something that has been dropped from the curriculum since 2009, because I have not come accross it in my studies!?
It’s just the pv of your future liabilities (expenses) and assets (income).
E.g when you retire your implied assets drop to zero -> as no human capital anymore. Your implied liabilities are highest at the beginning of ritirement and the decrease.
Rereading the question: for answering i and ii) you just need to know that they are retired since 5 years. Risk tolerance has deals with the other part (higher return than expected).