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2016st2 Q&a 1.16

U

User 1234

Member
Regarding to the scenario "Increase in yields", I feel that solutions under both methods are interchangeable, I can't see which points we should distinguish both methods in the solution. Could anyone help please?

Thanks a lot in advance!
 
I think there's overlap - they are both with-profits after all. But things can happen more slowly with A to B as we smooth payouts - and take more of a long term view with regard to the regular bonuses. So even if we make an immediate gain then we're likely to increase RB rates slowly as opposed to just pay a higher dividend because the formula produces a higher number.
 
Muppet said:
I think there's overlap - they are both with-profits after all. But things can happen more slowly with A to B as we smooth payouts - and take more of a long term view with regard to the regular bonuses. So even if we make an immediate gain then we're likely to increase RB rates slowly as opposed to just pay a higher dividend because the formula produces a higher number.
Click to expand...

It's more clear now! thanks
 
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