MFAD vs RA

felixc5felixc5
in General

Do you think future exam questions related to RA would be somewhat similar to previous MFAD questions where you may have to determine the PV of the future cash flows and then with the information given depending on the question, use any of quantile/cost of capital/margin method to calculate RA?

Comments

  • Staff-T1Staff-T1

    I would think so. I'd expect you'd need to know how to calculate the quantile of (PVFCF +RA) based on the normal/lognormal distribution. I think it's also fair game for the CAS to test on how you would calculate the actual RA. In that sense, it may be more difficult since the MfAD is usually given whereas you will probably need to calculate the RA

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