Given that IPS chews up a ton of time (for me even just reading the case facts), is flaky at best, and a confidence rocker, does anyone see a problem strategy of doing IPS essay question last? Please share any better plans you have.
NOt really. You know its the first thing you have to do when you get in there. Best to tackle it fresh when you got all pistons churning.
I don’t see what the big deal is with the IPS. It seems like easy points to me. But then again, I just saw in a Schweser answer key a computation of required return that was a real screwball of an interpretation. It’s not at all clear to me, when there are expenses that are out of the ordinary, when to just reduce the size of the portfolio (decreasing denominator) and when they want you to look at them as expenses (increasing the numerator). Some guy is going to law school for 3 years @ $45,000 each year plus he has living expenses. I’m managing the portfolio for the living expenses, and deducting the law school expenses off the top as a sunk cost. The answer key wanted the portfolio to preserve the purchasing power after all expenses (including law school tuition) were paid. That makes very little sense to me.
gjertsen Wrote: ------------------------------------------------------- > I don’t see what the big deal is with the IPS. It > seems like easy points to me. But then again, I > just saw in a Schweser answer key a computation of > required return that was a real screwball of an > interpretation. > > It’s not at all clear to me, when there are > expenses that are out of the ordinary, when to > just reduce the size of the portfolio (decreasing > denominator) and when they want you to look at > them as expenses (increasing the numerator). Some > guy is going to law school for 3 years @ $45,000 > each year plus he has living expenses. I’m > managing the portfolio for the living expenses, > and deducting the law school expenses off the top > as a sunk cost. The answer key wanted the > portfolio to preserve the purchasing power after > all expenses (including law school tuition) were > paid. That makes very little sense to me. If you have law school expenses for 3 years out, then socking it all in cash is an inefficient use of assets. My rule of thumb is if it’s ongoing or further than a year out, the required return should be able to cover it. By the way, I also do not see IPS being difficult according to the other sections. It’s all about reading comprehension and understanding the underlying concepts.