Required Rate fo Return discount, investment, management, question, required

mkytz15

How would one solve this question:
What is the required rate fo return for a DB pension plan assuming a discount rate to value liabilities of 5 percent, inlfation of 2 percent and 0.3 percent investment management costs?

cyber21

Since …. then x% is the req rate of return.
I think this is fine. But i barely had time to even THINK of their question format lol i just answer and move forward and STILL i left question 9 untounched!

MiniMe7

^interesting

SpyAli

Ilovegold wrote:
I recall the question said “show your calculation”. Would the CFAI do that of it was just the 5%?
Another hint that you had to make some exercise with the figures. If you were to put just 5% in the answerbook, it is hardly to be considered as “calculation”, isn’t? Thus, in order to make the calculation you needed to show a manupulation with those three figures.

jcfa2011

I recall the question said “show your calculation”. Would the CFAI do that of it was just the 5%?

soddy1979

^ must have been blind too .. low probability to have a lot of blind people not seeing management fees.. high probability of having different versions of exams.. who knows ..

whew1110

i must have been blind, i didnt see mgmt fees either.  were they buried in the text somewhere?

fishmarket

Given the discount rate did not state that inflation was included, I think it is safer to add inflation.  Also add MGMT fees too.

ASSet_MANagemen

Went with SQRT(25) here as the RRR

Benjiko

not if its real kid cudi