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  #1  
Old 02-26-2018, 12:52 PM
Alaska Alaska is offline
 
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Default FA Task 6

I'm really confused about the wording in Task 6. "Addressing the general direction and magnitude are sufficient; you do not need to recalculate the tax." How am I supposed to address "magnitude" without recalculating? In my first submission I said "significant increase", but I'm thinking that didn't satisfy their "magnitude" question.
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Old 02-26-2018, 01:54 PM
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I dont think it's possible to recalculate it precicely with the information given iirc, but I did recalculate it and gave an approximation in percentage increase
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Old 02-26-2018, 03:43 PM
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Based on the direction that all of the assumptions have changed, will the change in tax rate be small or big. Is it going to be higher/lower just a little bit or more than that?

With that being said your answer should be adequate. I said something similar.
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Old 02-27-2018, 10:37 AM
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You can look at the results of your sensitivity testing to get an idea of the magnitude.
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Old 02-27-2018, 12:22 PM
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Besides using sensitivity testing, do you think it is sufficient to change one assumption at a time in the model and see how that impacts the tax rate that is needed to fund over 30 years for the asset mix you chosen, or any asset mix (asset mix probably won't effect magnitude and direction)?

I understand you will be looking at time zero instead of time 5. But it should give a reasonable direction and magnitude.
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Old 02-27-2018, 12:25 PM
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Quote:
Originally Posted by master_a00 View Post
Besides using sensitivity testing, do you think it is sufficient to change one assumption at a time in the model and see how that impacts the tax rate that is needed to fund over 30 years for the asset mix you chosen, or any asset mix (asset mix probably won't effect magnitude and direction)?

I understand you will be looking at time zero instead of time 5. But it should give a reasonable direction and magnitude.
That's kind of what I did to estimate the percentage change
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Old 03-05-2018, 01:40 AM
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For task6, did anyone recommend changes to the economic assumption in the original model?

In my first attempt, I thought the actual investment return tanked at year 3 compared to the expected, only to realize after I failed that the expected return I referred to was the result of a single scenario. (1000th scenario in the spreadsheet)

So I'm guessing there is no good way to find what the total expected return for the expected and therefore I'm confined to only mentionining demographic assumptions of actual over expected...am I on the right track this time?
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Old 03-05-2018, 11:05 AM
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Quote:
Originally Posted by prh View Post
For task6, did anyone recommend changes to the economic assumption in the original model?

In my first attempt, I thought the actual investment return tanked at year 3 compared to the expected, only to realize after I failed that the expected return I referred to was the result of a single scenario. (1000th scenario in the spreadsheet)

So I'm guessing there is no good way to find what the total expected return for the expected and therefore I'm confined to only mentionining demographic assumptions of actual over expected...am I on the right track this time?
Sort of. I think you're on the right track as far as not being able to compare to the expected return. You can still briefly comment on the investment return by year, though. Based on the actual 5 year results I was given, I didn't think the investment committee chose investments that were anywhere close to the target allocation I determined.
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Old 03-05-2018, 11:11 AM
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Quote:
Originally Posted by actually actuary View Post
Sort of. I think you're on the right track as far as not being able to compare to the expected return. You can still briefly comment on the investment return by year, though. Based on the actual 5 year results I was given, I didn't think the investment committee chose investments that were anywhere close to the target allocation I determined.
Agreed. And the tax was way too low as well.
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Old 03-05-2018, 12:10 PM
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Thanks for rerouting me! I know what to write now.

Quote:
Originally Posted by actually actuary View Post
Sort of. I think you're on the right track as far as not being able to compare to the expected return. You can still briefly comment on the investment return by year, though. Based on the actual 5 year results I was given, I didn't think the investment committee chose investments that were anywhere close to the target allocation I determined.
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