Action of distributors

Discussion in 'SP2' started by Actuary@22, Apr 12, 2022.

  1. Actuary@22

    Actuary@22 Very Active Member

    Hi

    In ch11 Section 6 ,please explain how distributors can take advantage of opportunities that arise due to timing effects in unit pricing. Not clear after reading the study material.
    Thanks.
     
  2. Mark Willder

    Mark Willder ActEd Tutor Staff Member

    Hi

    Imagine that the insurer sets its unit prices at the start of the day and performs all transactions during that day at that price. An insurance intermediary could then observe a large rise in the stock market during the day and recommend to their clients to buy more units at the lower price from the start of the day. They have then bought the units cheaply.

    Best wishes

    Mark
     

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