› CFA › CFA Level 3 › IPS – inflation rate and required return

IPS – inflation rate and required return

Add A Reply
Login
  • Author
    Posts
    • Avatar of Alta12Alta12
      Participant
        16 Oct 2017 at 11:46 pm
        Up
        0
        ::

        @ravivooda @marc @ajfinance @Sophie‌

        Both @vincentt and I are trying to ascertain whether foundation/trust and endowment is the only institutional portfolio that requires adding inflation.

        Please let us know your thoughts on this. Many thanks!!!

      • Avatar of Alta12Alta12
        Participant
          17 Oct 2017 at 4:26 am
          Up
          6
          ::

          @ajfinance thanks! 🙂

        • Avatar of Alta12Alta12
          Participant
            17 Oct 2017 at 3:21 am
            Up
            3
            ::

            @ajfinance do we need to take into consideration inflation for DB plans? Or is the required return = discount rate used to calculate liabilities only?

          • Avatar of AjFinanceAjFinance
            Participant
              17 Oct 2017 at 3:23 am
              Up
              2
              ::

              @Alta12 I think for DB plans, the discount rate already considers inflation.

            • Avatar of AjFinanceAjFinance
              Participant
                17 Oct 2017 at 3:10 am
                Up
                0
                ::

                @Alta12 Usually when an institution is supposed to provide perpetual support, you compound the return components.

                But I don’t think it’ll make a difference during grading, if the question is ambiguous as to the type of calculation to be used. Both will give you identical answers.

            • Author
              Posts
            Viewing 4 reply threads
            • You must be logged in to reply to this topic.