sorry if it’s been asked - anyone done this question? seems like schweser got pretty lazy in the answer - - can’t imagine it’s what CFAI would have in mind first, since when do you assume a mtg payment is interest only? 30 year loans are never interest only - - so i think they’re wrong on the income shortfall but more importantly, they didn’t suggest an actual % return for the return requirement; and they never actually give an answer for risk requirement - - just go through arguments as to why it could be one way or the other - - i struggled here and finally came out with “average risk” bc of long-term horizon and signif wealth offsetting shortfall and high risk job - - but schweser decided their question was too hard to answer so didn’t kind of confusing - - thought we always had to have specific answers esp with individual IPSs - - i’m giving myself full credit even though i’m not really grading AM exams
sorry - this was Vol II, Exam 2 Q9
yeah i remember that one. if CFA gave us that question they would want us to calculate the yearly payment on the mortage and factor it into a total return. i don’t think there will be as many unclear questions on the actual exam.