NO.PZ202212280100002002
问题如下：
ii. Identify one advantage in Thurlow’s situation of the ALM approach compared to the AO approach. (2008 Q4)
选项：
解释：
Asset Liability Management (ALM) is preferred because:
1. ALM reduces risk by explicitly considering the liability exposures of the pension plan.
2. The Asset Only approach can result in inefficient investment policies that may expose the plan to excessive and unrewarded risk relative to liabilities.
3. ALM approaches typically result in an optimal portfolio with a higher fixed income allocation.
With ALM approach,the equities allocation can provide potential for increasing the size of buffer between pension assets and liabilities with negligible risk to funded ststus.While with AO approach,a decline in equity values would put the plan in underfunded status.
