return objective in IPS difference, objective, payments, achieve, between

Londonrocks

Does it bother anyone else CFAI does not come straight out and tell us what they are looking for in the return objective? There seems to be some answers that include calculating out a return (quanititative) and some answers that only provide a qualitative answer.
Reading 14 page 165 CFAI text # 12: Return Objective Answer: “To achieve its objectives the Family Portfolio must provide for after tax distributions equal to the difference between the Smiths expenses and their fixed income payments. To maintain its real value, the portfolio must also grow at a rate that offsets inflations impact on the Smiths total expenses, including those currently covered by their fixed income.”
When I read “provide the Return Objective” I assume there is a qualitative portion that states what the overall high level objective is, and I also assume there is a quanitative portion where we may have to determine the amount and after tax annual return on a % basis using math.
Question 10A in this same section says that the Return Objective is inadequate because they Tota return estimate of 2.7% is lower than the actual required after tax rate of return of 5.3% (48000/900000)
TLDR: In a question like 12A, how are we supposed to know NOT to include a % return number as part of the return objective?
It would be helpful if instead of examples, CFAI said, the return objective should…A, B , C
Did I miss something?

iteracom

Exactly my question too, even Schweser does this in Morning 3 , volume I . They do not give ANY clues at all about expenses , just total assets. Then they ask for an IPS with Return objectives.
I forgot what the answer was , but it was lame

hoangvu90

On the exams they are clear, this annoyed me also in the readings. It will say “calculate”, or “show your calculations”. You will see when you do prior years exams.
“Formulate” generally means describe.

bchadwick

ok word. they better else Imma be upset
actually most of them say “prepare”

dvilayphet

For the Schweser exams, if enough info was given, I’ll put down a quantitative return requirement and all the other language that comes along with it (maintain real portfolio value, increase surplus, meet spending needs, etc.). That way you’re covered on both bases.