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CP1 April 24 paper 2 (ii)

J

Jaz

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The question asked for a fair valuation of the liabilities. The IFoA solution does not mention the replicating portfolio approach while the Acted solution does. Which one should I refer to?
 
Hi - the replicating portfolio point in the ActEd solution is equivalent to the final point in the IFoA solution: 'Fair value will be based on regulatory / notional portfolio.' We reworded it to make it easier to understand in the context of the phrasing used within the Core Reading. In the exam, referring to a 'replicating portfolio' should be awarded the same credit as referring to a 'notional portfolio', as that is what is being implied by 'notional' here. Personally, would recommend using the phrasing as per the Core Reading ('replicating portfolio').
 
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