There is a statement in the solution that I do not quite understand. It says that the small effect of smoothing on the total asset shares should lead to affordable policy maturity values in aggregate. Is it because the smoothed asset shares are less than the aggregate asset shares? Also why is there almost no change to the free assets from this smoothing? Is it because the discrepancy is very small when the asset shares are compared?
Last edited: Feb 14, 2019