Introduction

Question 1

Optimal matched position

Answer 1

• the matched position that satisfies the provider’s required degree of certainty in meeting
  liabilities for the least cost ,
• taking into account regulatory requirements ,taking into account regulatory requirements
  and other investment objectives

Question 2

A provider should select investments that are appropriate to the

Answer 2

• Nature
• Term
• Currency
• Uncertainty Of the liabilities and
  2. - provider’s risk appetite
  The investment should also be selected so as to maximise the overall return on the assets,
  where overall return includes both the income and capital

Question 3

Matching of liabilities and assets

Answer 3

o This removes the risk of assets held performing badly relative to the liabilities
o Matching may be required by the regulator (law)
o Matching normally conflicts with the need to maximise investment returns
o When mismatching , one needs to hold a mismatching reserve
o This is an extra capital needed ( free assets ) and providing cushion against market
movements