Schweser Practice Exam 1 PM Session

[beingthatguy]

Hi,
It’s been a long time since I posted on the forum! It took a long time but I am finally on level 3. Anyone do the exam 1 afternoon session in schweser? I am looking at the question/answer for 33. I am stumped as to why they are not using $75mm as the liability target/termina value for the immunization strategy. Maybe that was the old strategy? It says in the case that the strategy was setup 4 years ago but doesn’t tell us the new objective? All it says is that the pension fund is worth $55. Sorry if this is vague but if anyone has done the exam, any help would be appreciated.

Maybe I am just missing something…

 

[Borlta]

Just did the this exam today, and I, too, am a bit unsure why they didn’t use the $75MM as the target. Given new return projections and the current asset base of $55MM, I understand why they can in theory achieve a fund value of $78MM and change, but I don’t get why that all of a sudden becomes the new target.

 

[jayman_137]

I got stuck on this one as well, but after reading the answer determined (at least enough in my mind for me to move on) that the $75MM amount was the liability estimate 4 years ago, and this amount maybe changed over the intervening 4 year period…

 

[paul1977]

I think it is a poor question. I wouldn’t get too worried about it.