L
lionking
Member
Hi there
I hope someone can help. I have a question from Chapter 11, page 14 of SA6.
The core reading says that the excess of the sum assured over the unit value should be considered a fixed liability.
Doesn't the value of the liability change depending on the unit price? In other words, if the unit price rises, then the value of the liability must fall, because the company only has to make up a smaller difference between the guaranteed minimum SA and the unit value.
If that is the case, then what kind of an investment policy should one follow to match those liabilities? Is it right to think of it as a fixed liability?
I hope someone can help. I have a question from Chapter 11, page 14 of SA6.
The core reading says that the excess of the sum assured over the unit value should be considered a fixed liability.
Doesn't the value of the liability change depending on the unit price? In other words, if the unit price rises, then the value of the liability must fall, because the company only has to make up a smaller difference between the guaranteed minimum SA and the unit value.
If that is the case, then what kind of an investment policy should one follow to match those liabilities? Is it right to think of it as a fixed liability?