Hi Everybody,
Happy to find you back this year for the level 3.
The following question I found seems partially false.
I would say that liquidity risk is a more important factor in dealing with lifestyle than savings risk. On the other hand savings risk is more important in retirement matters.
Lifestyle appeals to a short-term horizon in which liquidity is essential. And rapidly going through the Curriculum can’t find a direct link on Reading 12.
What do you think?
QUESTION-------------------------------------------------------------------------------------------------------------------------
Which of the following is least likely to jeopardize an individual’s desired lifestyle and/or bequest?
A) Savings risk. B) Liquidity risk. C) Longevity risk.
Your answer: A was incorrect. The correct answer was B) Liquidity risk.
The three primary risks that could jeopardize an individual’s desired lifestyle and/or bequest are: (1) financial market risk, (2) longevity risk, and (3) savings risk. Liquidity risk is not a factor in determining an individual’s desired lifestyle or bequest.