S
ssawyer
Member
Is it just me, or did there seem to be a screw up in this question?
Of the three contract designs presented (original, design A and design B), only design A had capital units - the others were just accumulation with varying allocation rates. So why did part ii) of the question ask whether actuarial funding would be useful for Design B allocating 8 marks, when the answer is simply "no - the contract design is not compatible, but it would be useful in Design A".
Surely the question that should of been asked was "Would actuarial funding be appropriate for Design A?" - you can then spend 8 marks talking about the effects on the cost of capital, matching of expenses to costs, need to adjust surrender values - all stuff that's in the notes.
Plus it is suspicious that the order of the contract descriptions was original, design A, design B. Did the person setting the question get thrown by the order and think that the second contract in the list was Design B when they meant Design A?
What did other people think...........???
Of the three contract designs presented (original, design A and design B), only design A had capital units - the others were just accumulation with varying allocation rates. So why did part ii) of the question ask whether actuarial funding would be useful for Design B allocating 8 marks, when the answer is simply "no - the contract design is not compatible, but it would be useful in Design A".
Surely the question that should of been asked was "Would actuarial funding be appropriate for Design A?" - you can then spend 8 marks talking about the effects on the cost of capital, matching of expenses to costs, need to adjust surrender values - all stuff that's in the notes.
Plus it is suspicious that the order of the contract descriptions was original, design A, design B. Did the person setting the question get thrown by the order and think that the second contract in the list was Design B when they meant Design A?
What did other people think...........???