Capital available

bkmlocksbkmlocks
in BCAR.Cdn

Hey Graham,

As you pointed out in the WIKI, its not very clear which items to add or minus when calculating the capital available. I got two questions on this.

  1. Do you think its safe to always just add Equity adjustments and minus all the other adjustments (Debt and Other) ?
  2. Are we supposed to be able to derive/come up with those adjustments or are those provided. I am not sure how I would calculate these anyway.

Thank you for your help!

As a side note, it looks like the CAS updated this reading and have a new version as at July 23rd 2020. Nothing much seem to have changed tbh, but the numbers in the example on pg 3 are slightly different now.

Comments

  • grahamgraham

    Hi @bkmlocks,

    1. I think you have the right idea. The reading doesn't specifically tell you how to do all the adjustments to the initial capital available but it makes sense to do what you said: add the equity adjustments and subtract debt and other. You could include a brief note to that effect on the exam if it comes up.
    2. You shouldn't be responsible for calculating those adjustments. They should be given.

    The most likely question is the BCAR calculation and an easy version came up on the 2019.Fall exam. I suspect they will gradually get harder but if you can do the calculation problems in the wiki quizzes, you will be fine. There are also some very typical types of short-answer questions that could be asked from this reading but again, all of that is covered in the wiki.

    Thanks for letting me know about the July 23, 2020 update. Sometimes the CAS updates a reading without notification if the changes are minor but we will do a side-by-side comparison just to verify.

  • AndrewLAndrewL

    Hello @graham, the example provided uses fixed income equity. I was wondering whether this is equivalent to Asset in "lura"

    Thanks,
    Andrew

  • Staff-T1Staff-T1

    Yeah I would think so

  • grahamgraham

    Just to be sure, which example are you talking about? Is it the "BCAR Rating (Practice)" in this section:

    The reason I ask is that the term "fixed income equity" is mixing 2 different things so I want to be sure exactly what you're asking:

    • Fixed Income: These are investments that pay regular interest or dividends, like bonds or certificates of deposit.
    • Equities: This refers to stocks or shares in a company, which might pay dividends but also carry ownership rights.

    Both of these are examples of assets.

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