I m not sure u if in a question asking to justify ur choice, you should say why the other 2 options are not correct. This is controversial, some say you should only focus on why A for example is correct, and not why B, and C are not correct when u justify...What do you guys think/know on that please?
Hello! You definitely need to focus on why portfolio A is correct like you mentioned. However, when you have an option to select 1 of 3 portfolios, sometimes your sentence should be written in a way to implicitly show why other portfolios are not selected. For example when you say portfolio X is the one that satisfies both conditions of matching the Macaulay duration of the liability AND having a present value equal or larger than the present value of the liability, you are also saying that the other 2 portfolios do not meet these conditions. So yes you need to focus on the portfolio you pick, however, in other cases where more than 1 portfolio can satisfy the conditions, it is inevitable, you need to show why a given option is superior to the other and hence, there is a comparison that is done. What would be completely wrong is to say Portfolio B and C do not meet the conditions so I pick portfolio A! Obviously, portfolios B and C being inadequate, doesn't mean portfolio A is good! You need to state why portfolio A is the chosen one, and ensure it is clear that it is the best one in case other portfolios would also do the job but to a lesser extent. Hope that helps!
The question will specify it. And the guy in the video is right- they will ask you to choose the correct option and explain why the other 2 are incorrect. DO NOT EXPLAIN WHY THE CORRECT OPTION IS RIGHT, it will not get you mark and waste your precious time.
Thanks for the instruction! It was really helpful.
Helpful, thanks
I m not sure u if in a question asking to justify ur choice, you should say why the other 2 options are not correct. This is controversial, some say you should only focus on why A for example is correct, and not why B, and C are not correct when u justify...What do you guys think/know on that please?
Hello! You definitely need to focus on why portfolio A is correct like you mentioned. However, when you have an option to select 1 of 3 portfolios, sometimes your sentence should be written in a way to implicitly show why other portfolios are not selected. For example when you say portfolio X is the one that satisfies both conditions of matching the Macaulay duration of the liability AND having a present value equal or larger than the present value of the liability, you are also saying that the other 2 portfolios do not meet these conditions. So yes you need to focus on the portfolio you pick, however, in other cases where more than 1 portfolio can satisfy the conditions, it is inevitable, you need to show why a given option is superior to the other and hence, there is a comparison that is done. What would be completely wrong is to say Portfolio B and C do not meet the conditions so I pick portfolio A! Obviously, portfolios B and C being inadequate, doesn't mean portfolio A is good! You need to state why portfolio A is the chosen one, and ensure it is clear that it is the best one in case other portfolios would also do the job but to a lesser extent. Hope that helps!
The question will specify it. And the guy in the video is right- they will ask you to choose the correct option and explain why the other 2 are incorrect. DO NOT EXPLAIN WHY THE CORRECT OPTION IS RIGHT, it will not get you mark and waste your precious time.
@@tim00zz nope they never, took the exam