guys - the question reqd return for 2008 only. so you need to add inf. only once. if it was not 2008 specific then you need to add them twice, once to index to 2008 and then once more till they pop.
OZZY u need to protect u r cap in 2008 too!!!
unikorn how did u calc u return req in second question i got 7.7%
equity -res…that’s why you indexed previous year’s cost. so you have preserved your cap in 2008. if the question wanted us to cal. the real rate of return w/o being 2008 specific. then we should multiply the return that you arrived for '08 by 1+inf.
u indexed prev yes cost coz they actually increased…by the inflation rate for if had 3 exp then it grw by inflation of 2% the exp wuld be 3\*1.02 but then if u had 100 principal… then if u dont increase the inflation rate…then ur portfolio wuld be worth 100*(1- inflation ) tht is 98 even if u earned enuff to cover ur expnses
equity-res… i think you are right… how did you treat IRA a/c for the return cal…that’s where i got stuck but ended including it in the pf val.
u need to include it …and thts why they gave a blended income tax rate wat was answer for the req annual rate for the Q1?
equity_research_nds, now you may be right here. That’s what I was thinking on my way back to home, and I realized 'oh sh!t, I bombed that part, cuz you need to protect the purchasing power of your capital, educational expenses have nothing to do with it. But then I thought, why would they included inflation linked to educational expenses in endowment portfolios in CFAI text. If they need to protect the purchasing power of the capital, they need to add only general inflation rate. The purpose of that very capital base is to serve for future educational expenses including the inflation part, so you need to add the related inflation rate. So here the same logic applies. The purpose of this portfolio will be to serve the educational + parent’s expense (at least for the next 7 years). So the blended rate should apply here. To prove my point, lets look at the next year. For 2008, the expenses will be: 53,022 The return on portfolio will be: 2,200,000 * 8.13% = 178,860 Ending portfolio value = 2,200,000 + (178,860 - 53,022) = 2,325,838 Next year’s expenses = 16,050 * 1.07 + 36972 * 1.027 = 55,144 Required real after tax return = 55,144 / 2,325,838 = 2.37% which is quite close to the required return last year. I can’t explain the difference of 4 bps though 
For 2nd part, i.e. Part G, did any of you think that the contributions were made on monthly basis, not yearly. If you take that into account, and then compute monthly return by: n = 120, PV = -2,700,000, PMT = -2,500, FV = 6,100,000 you come to a monthly return of 0.6183%, compounding it to annual return gives: (1.006183)^12 - 1 = 7.68%, not 7.7%, but i think that is minor difference, and ignorable. BTW, all of this has reduced to mere an academic exercise for me now, as I know I’ll be sitting for L3 again next year… 
unikorn… did u q 11 am? i got unhedged return of .47% in US investment and -2.8% in Euro
You are not supposed to them separately. It asks for unhedged return on entire portfolio. I got -1% unhedged return and 4.xx% rounded to 5% hedged return. equity_research_nds Wrote: ------------------------------------------------------- > unikorn… did u q 11 am? > > i got unhedged return of .47% in US investment and > -2.8% in Euro
I couldn’t touch Q10 or Q11 at all. No, no! I did touch A.(i) of Q10… Yes, I remember that.
What is Q10 about? Constant mix vs. CPPI? IF that, I had sell 38x for constant mix and buy 3xx for CPPI. I don’t remember the numbers any more.
yes u r right bluelily
Q10 was fixed income performance attribution. Something which I do in my daily life, but didn’t have the time to do it in exam, 