In an IPS for any institution investor is the willingness to take risk required? Just was busy doing Schweser Exam 2 AM and filled in everything but then in the answer guide it said for institutional investors the willingness isn’t required. Is that correct?
yes. There willingness is always there. Its their ability what is counted
Agree. I could see where could dimension the willingness of a small foundation/endowment, but I can’t recall this having been asked before
right, but is it neccessary to note in the IPS? i.e. “the AF Pension plan has a below average willingness to take risk”
I don’t think it’s necessary. (SPOILER ALERT) e.g. 2008 exam #2C… “State an appropriate risk objective for TEPP”. When I took the first time, I broke into “Ability” and “Willingness” - “Willingness” being low, I thought, because they wanted to reduce the underfunded status. The answer key talks about maintaining the plan assets at a certain level… i.e. very different than my answer.
I think for an insitutiuonal you ingore any bullcrap about investing in magic beans to buy magic rockets and you just put down what they should be doing.
so if you broke it down to ability and willingness and an overall, do you not get full points? or better to leave it out so ability isnt diluted by unnecessary stuff?