Difference between revisions of "Bright Line Indicator Test"
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| − | The '''Bright Line Indicator Test''' is discussed in ''[[COPLFR.SAO]]'' as part of the SAO but it requires knowledge | + | The '''Bright Line Indicator Test''' is discussed in ''[[COPLFR.SAO]]'' as part of the SAO but it requires knowledge [[Odomirok.19-RBC]], specifically ''[[Odomirok.19-RBC#Alice.27s_1st_Day_.28Intro_to_RBC.29 | Alice's 1st Day]]''. That section will only take a few minutes to read so you should do that before proceeding. |
:{| class='wikitable' | :{| class='wikitable' | ||
Revision as of 14:11, 7 September 2019
The Bright Line Indicator Test is discussed in COPLFR.SAO as part of the SAO but it requires knowledge Odomirok.19-RBC, specifically Alice's 1st Day. That section will only take a few minutes to read so you should do that before proceeding.
Question: what is the bright line indicator test
- IF
- [1] the AA does not address material adverse deviation
- [2] 10% x (net L & LAE) > TAC – CAL
- THEN
- financial analyst should pursue comments from the AA
- IF
Example:
- Suppose the AA did not address material adverse deviation and that:
- net L & LAE = 500
- TAC = 600
- ACL = 280
- Then:
- 10% x (net L & LAE) = 10% x 500 = 50 > 40 = (600 – 560) = (TAC – CAL) = (TAC – 2 x ACL)
- Therefore, the financial analyst should pursue comments from the AA regarding material adverse deviation.
Here are 2 old exam problems regarding the Bright Line Indicator Test:
