September 2010 Q7(v)

April 2011 Q7(v)

Part (v) mentions that the company's capital requirement for non-insurance risk is 15%, however the table earlier in the question describes the capital numbers as being "economic capital requirements".

So why does the solution multiply the economic capital requirements (=1,700) by 15%? I feel like the table is poorly labelled, and should read "economic capital outputs" or something similar. Am I wrong?

Thanks

edit: the examiner's comment describes the 15% as the cost of capital, which is not even hinted at in the question. Surely this is just a poorly-worded question.

 

April 2011?

I guess you are referring to April 2011 rather than September 2010, right?

I found this question to be very misleading as well but this reply helped me "sort of" get it.

September 2011 refers to the same concept in 6ib.

 

Thanks for linking me to that topic (and for the correction about exam).

I think it's sloppy labelling, which doesn't surprise me. I see so many typos, inconsistencies and silly mistakes in questions during my time as a student it makes me wonder how many people actually proof-read the scripts before they're distributed.