I think I put below, the way it said “They are just able to cover expenses” or something like that coupled with the relatively small portfolio and that there two idiot kids might not pass the test.
just to clarify…was the fact that they were “required to keep investable assets in short-term deposits” willingness or ability? It seemed more like willingness, but the way the statement was worded made me think ability, which pushed me to below average tolerance? anyone else?
An additional factor is that it mentions that they are very confident regarding their future employment. Since Human capital is a very significant factor, I picked above average.
Hmmm I think I remember writing something like that. Maybe I put above, I can’t remember.
Definitely above. They have a long time horizon, their income covers their expenses, and they have a large windfall coming.
Wait, what where the other parts, was there a part b which was like give two reasons above and two reason it could be below?
above average for sure question stated that the family didn’t want to count the second trust distrubution in investable income, but did want to count it as discretionary wealth. This amount was gar. to come in when she was 40. Long time horizon, 1700000 discretionary wealth, and possibly substantial inheritance later…def above average ability also it wasn’t mandatory that they keep the 500k in cash, they just wanted to keep a real value of 500k
sandy_capone Wrote: ------------------------------------------------------- > An additional factor is that it mentions that they > are very confident regarding their future > employment. Since Human capital is a very > significant factor, I picked above average. I agree, CFAI readings made a huge to do about this.
living expenses is supposed to rise along with earnings, that statement merely tells you the portfolio doesn’t need to come up with living expenses.
above for me
Does anyone know what happens if you write “Above average to Average”. Actually, that’s what I did… …Does CFA penalize you ?
So what did you circle?
kingcobra Wrote: ------------------------------------------------------- > Does anyone know what happens if you write “Above > average to Average”. Actually, that’s what I > did… > > …Does CFA penalize you ? you had to circle something not write something
The expenses are critical in nature … risk tolerance has to be below average …
Definitely below, in my opinion. The argument that they could pay cash for the house does not fit with their objectives… they need a c.5% real return from their portfolio OR ELSE… Furthermore, this family has assets 995k… they are not rich.
I completely agree with Etienne
i disagree… zidane… our IPS was competely different frm theirs… they had no WALT
Damn I think I wrote this part out. I never filled out the template… Scr^& it. I dont know what CFA’s policy is on not writing within the bounds.
Damn I think I wrote this part out. I never filled out the template… Scr^& it. I dont know what CFA’s policy is on not writing within the template boundary. And with my fuzzy answers, it is probably worse…
I think I choose below average as well - strictly because their housing was 100% paid from the portfolio. I thought there was an example I saw somewhere that resulted in below average in a similar situation to this.