3 (1) the question is ......non-economic factors...... but referring to the solutions, ......expected return, investors income, a change in their liabilities, , price of alternative investments, expense of trading...... are these points belonging to non-economic? on that case, what means "economic factors"? my understanding is that something like social trend, culture, legal/tax scheme change, life expectation change, overall healthy level of the population etc. might be belonging to "non-economic", how to understand the distinction between economic and non-economic factors for this question?
Hi Smith, I believe that economic factors would be: inflation, short-term interest rates, exchange rate, fiscal deficits, returns on assets, discount rate. These are those factors that I think are the most important ones (based on my CT7 knowledge). The marking scheme gives examples of non-economic factors. For any question, the concept of economic and non-economic factors would be the same. Hope this helps.
Yes, economic factors would be those that Dar_shan0209 lists. These are fundamental to the intrinsic expected performance of different asset classes. The 'non-economic' factors that the examiners list are taken from Section 7 of Chapter 11. These are more 'external' to the economic fundamentals that affect asset performance. They are mainly features of the investors that might change (and so might change how investors view the assets). Hope this helps
