SA7 Specimen Paper - Q4

[Mufaddal Jamali]

Whilst attempting question 4 of the specimen paper (which is taken from SA6 Sept 2015 Q1), I found the split between the various parts quite arbitrary. Was wondering if anyone else felt similarly, or could explain why my understanding of the question wording is faltering. I've tried to explain my issues below:

Q4.i.a: Asks for a definition of infrastructure projects (worth 5 marks). I would argue that its very difficult to find 5 marks worth of definition of infrastructure without talking about investment characteristics. Indeed the solution mentions the long-term nature of infrastructure projects, which I think is an investment characteristic.
Q4.i.b: Asks for investment characteristics of infrastructure projects (worth 11 marks). No issues here.
Q4.i.c: Asks for pros and cons if investing in infrastructure (worth 4 marks). I had pretty much covered the pros and cons of infrastructure investment in my answers to part (a) and (b) so wasn't sure how to answer this without repeating myself. So I tried to make it specific to sovereign wealth funds by saying that infrastructure improvements may be in line with the objectives of the fund (economic stability / future generation / etc). However, the solution simply repeats points made in part (b) but splits them out as 'attractive' vs 'unattractive'.

Q4.ii.a: Asks for asset classes we can use to invest in infrastructure (worth 5 marks). As a standalone question, I don't think there's an issue. But considering the very next question asks for methods of investment (which implicitly will cover the asset classes) and challenges (which will cover the details of investing via each asset class), it made it very difficult for me to split out what information I should provide in part (a) vs part (b).
Q4.ii.b: Asks for different methods of investing in infrastructure as well as the associated challenges of each (worth 11 marks). No issues here.

Any thoughts, feedback, or advice appreciated.

 

[Colin McKee]

Hi, I agree with some of what you say, but the solution does give a reasonable amount of information for the marks available, and most of it fits the instructions words, and should be known to SA7 practitioners.
For example, Q4(i)(a) does give 5 marks worth without really going on to characteristics. It gives examples, it gives why infrastructure financing is used and is popular, and what it achieves. That seems to fit in the instruction for the question. Q4(i)(c) focuses on the sovereaign wealth fund angle which, as you say, gives a new raft of things to say. So that seems OK as well, but I think the examiners solution here is very "summarised", and that the marking would have been flexible. If you brought the constraints of a sovereign fund into your answer, you would have scored well, even if it didnt match up exactly with the skeleton in the solution. SA7 is much more freely marked than (for example) CA1 (CP1) or SP5.
IN terms of your issues with Q4(ii)(a) and (b), the first thing to note is that when questions are a, b, c, ... the marker will give marks whichever section you put your coments in - even if the examiner has done it differently. (Not always the case with parts (i) (ii), ...)
But again, I dont see this as being too bad. Asset classes was aiming for equity or debt instruments. And methods of investing was direct or indirect (this was maybe not 100% clear I admit). But overall I dont think the question is too bad, and the solution sticks to the instructions in the question in most areas.