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Old 04-01-2017, 07:22 AM
Andy Dwyer Andy Dwyer is offline
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Default CDEF Risk/Return Requirements

Hopefully this doesn't get too specific, and can be more of a discussion. I'm working on FA Task 2, and am trying to set the risk and return requirements. I think setting the risk requirement is fairly straightforward; start with the risk metric(s) provided in the model that you feel adequately measures the level of risk of the portfolio, and bound that metric. For the return requirement, I'm struggling to see a specific metric in the model that could somehow be used to define the return requirement or measure investment returns. The metrics all seem to be related to risk, which I wouldn't think should also be used to determine a return requirement.

I realize that the metrics provided will be minimized when returns on investments are maximized, so maybe placing a bound on the mean would be sufficient..? But I'm not sure that's how I should be thinking about this.

Does anyone who's worked on CDEF have any general thoughts on determining the return requirement or suggestions for what I should be focusing on in the model in relation to the return?
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Old 04-01-2017, 08:11 AM
trapperj trapperj is offline
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You probably want the fund to remain solvent
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Old 04-01-2017, 08:34 AM
Andy Dwyer Andy Dwyer is offline
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Yes, that's definitely important! But in terms of setting the return requirement, should the actual return requirement be some specific guideline that can be used to ensure the fund is solvent, or is generally stating "the return on assets must be great enough to remain solvent" sufficient?
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Old 04-01-2017, 08:58 AM
trapperj trapperj is offline
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That's for you to figure out. Read the provided information and determine how you should approach this. Unless you suggest something incredibly stupid and/or justify poorly - you will pass.
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Old 04-01-2017, 11:06 AM
Hartke Hartke is offline
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Determining the risk/reward requirements is a big part of the FA. The reward requirement is particularly subjective.
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Old 08-05-2017, 10:41 AM
xaznstylegrlx xaznstylegrlx is offline
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Can someone point me to the Module/Section where risk/return requirement is discussed? Or even textbook reading pages? TIA
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Old 01-19-2018, 11:04 PM
tom193 tom193 is offline
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Quote:
Originally Posted by xaznstylegrlx View Post
Can someone point me to the Module/Section where risk/return requirement is discussed? Or even textbook reading pages? TIA
Bump
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Old 03-19-2018, 11:03 AM
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unicorngrrrrrrrl unicorngrrrrrrrl is offline
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Quote:
Originally Posted by xaznstylegrlx View Post
Can someone point me to the Module/Section where risk/return requirement is discussed? Or even textbook reading pages? TIA
double bump
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Old 03-19-2018, 01:13 PM
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Sir Issac Sir Issac is offline
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Quote:
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double bump
I didnít see it in the slide readings.

This is why I made this post http://www.actuarialoutpost.com/actu...d.php?t=330243
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Old 03-19-2018, 01:47 PM
yunbao yunbao is offline
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I put something like return requirement is return metrics satisfies blablabla, and risk requirement as risk metrics satisfies blablabla, blablabla being numbers. Any thoughts?
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