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  #1  
Old 02-25-2018, 07:53 PM
ZSunny ZSunny is offline
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Default FA CDEF Task 2 Question 2

This question says to recommend risk/return requirements and justify your recommendation.
Are they asking for a general/generic response here or a more specific response?

To me, general would be like stating the objectives and talking about the fact that the fund would need to remain solvent and that you should diversify the portfolio, etc.

Specific would be stating actual numbers/ranges from the data given, i.e. a mean of 800 or a CTE(90) value between 800-850.

For those that MMR'd, what did you do?
I hesitate to use specifics because I feel that means you need to use the Excel spreadsheet that they don't even introduce until question 3.

This is my second attempt at the FA and the typical Tasks 2 & 5 need the most improvement so I just want to make sure I'm understanding things correctly.
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Old 02-25-2018, 08:31 PM
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I failed and got tasks 2 and 5. I used specifics. I still think this is the correct approach.
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Old 02-25-2018, 10:02 PM
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I used specifics and I think you're supposed to. I agree that it's weird that task 2 doesn't mention the spreadsheet. However, I think it is (briefly and vaguely) mentioned in the background explaining the situation, before the tasks.
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Old 02-25-2018, 10:26 PM
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I would provide a range for discussing the 'risk/return' requirements (that's what I did). Think of it as you are trying to choose a requirement that will derive your tax rate.
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Old 02-25-2018, 10:43 PM
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not exactly sure what you mean, but i think i used specifics. i took the metrics in the spreadsheet and recommended a risk/return requirement from them. It's not worded that well, but fairly certain they mean to take the metrics from the spreadsheet and recommend something.

this thread has lots of helpful information on task 2:

http://www.actuarialoutpost.com/actu...d.php?t=330243
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Old 02-27-2018, 06:25 PM
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Did anyone ever suggest a certain rate of return for the fund, or utilize the year over year return that's calculated in the spreadsheet as a recommended requirement?
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Old 02-27-2018, 06:34 PM
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Quote:
Originally Posted by ZSunny View Post
Did anyone ever suggest a certain rate of return for the fund, or utilize the year over year return that's calculated in the spreadsheet as a recommended requirement?
what's shown on the spreadsheet is the result of the last scenario of 999 scenarios. it's not usable for anything as far as I can tell.
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Old 02-27-2018, 06:52 PM
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what's shown on the spreadsheet is the result of the last scenario of 999 scenarios. it's not usable for anything as far as I can tell.
I thought it looked like it calculated the YOY for each year for the 30 years of the fund. I was just curious if anyone recommended something like the average YOY should be x%.
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Old 02-27-2018, 07:03 PM
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I thought it looked like it calculated the YOY for each year for the 30 years of the fund. I was just curious if anyone recommended something like the average YOY should be x%.
it does, but it is only showing you the results of this for the 999th scenario when running the macro, thus rendering it useless.

the only numbers that are useful are in the results tab, not the model tab.
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