Giving up on IPS risk assessment..

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sterling76

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I’ve had it with the risk assessments! I haven’t gotten one right. What’s the most it can be worth, 6 points? Well I’m focusing on the other stuff.. return is obviously more important.
Just gotta go with your best shot and leave it at that. 2/6 ain’t bad. I’m tired of obsessing over the wrong answer I come up with every time..
 
hang in there, bro. i think most of us find this to be impossibly subjective.
 
Yeah, I’ll hang in for the balance, but seriously, we shouldn’t even worry about this! Hell, sometimes the answer is like, below-average to average. Makes sense to pick the right two, and go for partial credit. Or no credit. Whatever. Just 6 points.
 
I thought I had a quantitative model built to handle all the possible situations. Then it failed.
Back to start again.
 
I’m tempted to copy the same post here as I just did in three related threads…
Aw.. heck, I will anyway:
The CFAI EOC questions do have one very good example of this … An individual who clearly has above average ability and has been taking a decent amount of risk already in his portfolio, but claims his risk tolerance is “average”. The CFAI text says he has an above average risk tolerance (Book 2, page 144, problem #9).
Point is that there is no rule and we’re just going to have to wing it.
 
Yeah, plyon.. I saw you post this somewhere before but I just did the EOCs on this today.
Exactly! What the hell!? He says average but we’re like, no you ain’t MF’er! Seriously.
Agreed, no rules, wing it. Focus on the return calcs cause that’s where the double jeopardy arises.
 
08 exam has a real brain buster for an institution…just thought c’mon, really?
 
I’m not sure if it is explicitly stated in the CFAI curriculum but a good rule of thumb from Schweser is to consider actions over statements. If a person states that he/she believes he/she has average willingness but invests in highly volatile assets, then that person really has above-average willingness. They may believe they are average but you don’t necessarily have a frame of reference for their viewpoint. They could be an entrepreneur used to taking lots of risk so these investments might seem normal to them, but considered on the spectrum of everyone, they are very risky.
 
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