KS practice exam answers confusing me

[gad4]

Im starting to get confused going through ks exam and Im curious if their answers are the only options.
For example, in the first problem 2015 exam the legal contraint they gave was.. “she should seek legal advice regarding the desired education of her children.” mine was “money in retirement account would have legal penalties if removed before age 60”
also they had the time horizon as one stage to retirement while I had two stage with money for college needed in one year and then retirement.
It also says that she needs 2m for retirement without BT or AT clarified. I figured since she needed that much, it woudl be an after tax amount, they felt it was a bt amount.
Any thoughts on these issues would be appreciated as I dont wish to make mistakes on the final exam.

 

[jamespeer]

In the exam for the return requirement they must specify Before/After Tax and Real/Nominal so I don’t think we will be left to assume in the exam (I hope so anyway!). For time horizon, if the education costs are to be paid within the year then they should form part of the liquidity constraint. If after 1 year I think you’re right to include that as a separate stage, as their expenses are reduced thereafter so this represents a change in circumstances. I was told that any significant event or cash flow would result in a ‘stage’ in the time horizon e.g. inheritance, paying off mortgage, paying for children’s education etc.

 

[jpsi1]

jamespeer wrote: For time horizon, if the education costs are to be paid within the year then they should form part of the liquidity constraint. If after 1 year I think you’re right to include that as a separate stage, as their expenses are reduced thereafter so this represents a change in circumstances. I was told that any significant event or cash flow would result in a ‘stage’ in the time horizon e.g. inheritance, paying off mortgage, paying for children’s education etc.

Must disagree with this rule. In 2010 AM paper the college payment was made at the end of 1st year and 1st year was associated with 1st stage of 1 year in time horizon constraint. Some CFAI AM papers would give full credit for either stating college years as a separate stage or including in first stage but not in 2010, so go figure.