KS Mock 2018 - Q5C

I’m chalking this up to KS verbiage issue, but question 5C on the 2018 mock talks about the impact on the plan surplus due to an immediate increase in interest rates (Duration of L > Duration of A). KS Answer: This would IMPROVE the Surplus.

The issue is there is NO SURPLUS currently (the plan is underfunded); so my answer talked about how an increase in rates would REDUCE the current underfunding gap (basically the same as improving the ‘surplus’).

Trying to determine t if my answer would be considered correct because I didn’t mention “improving the surplus” when there is no surplus. Or am I just missing something entirely here?

I would hope your answer would get full marks given you’re pretty much saying the same thing, but I think if a question like this came up I would just go with “improving the surplus” even if there is no surplus.

It seems like they refer to the ‘surplus’ as just the difference between the MV of Assets and the PBO, regardless if there is a surplus or not.

Was this from the CFAI live mock yesterday? I also wrote “surplus will improve” I think this will get full credit.

If I were marking it, your answer would get full marks.

Thanks S200!

You’re welcome.

Why do you discount me by 90%?