Skip to content

NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Miscellaneous Aspects of Retirement Planning

While preparing a retirement plan, an adviser assumes that the client's expenses will rise every year because of general price increases. Which assumption is the adviser making?

The adviser is making an inflation assumption. General price increases push up living costs each year, so current expenses must be inflated to retirement-date values when estimating the corpus needed. Longevity and replacement ratio address different aspects of planning.

  1. ARate of inflationCorrect
  2. BRate of return on equity
  3. CReplacement ratio of zero
  4. DLongevity risk factor

Explanation

Rising expenses due to general price increases represent inflation. The adviser inflates current expenses to estimate the future retirement corpus. Longevity relates to life span, and replacement ratio relates to income percentage.

Did you get it right without looking?

One question tells you little. A timed set on Miscellaneous Aspects of Retirement Planning shows your real accuracy, how long you take and where you lose marks.

Practise Miscellaneous Aspects of Retirement PlanningFree diagnostic mock

More Miscellaneous Aspects of Retirement Planning questions