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April 2013 - Question 1

S

Siobhan Carty

Member
Looking at quarter 3, I am just wondering how to arrive at: 7/12 and 17/24 for the unearned exposure?
Thanks :)
 
Hi

The 150 million comes on average at 1 August ie after 7 months of the year therefore the cashflow is at 7/12. You could also use a generalised version of the 24ths or 8ths rule by dividing the year into 6 2-month periods.

The 50m comes on average around the middle of September which is after 8 and a half months. Expressed as a fraction of the year it's 17/24. You can use the 24ths rule as well.
 
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