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Basic Question 5 of 5
An analyst has a client with a $1,000,000 portfolio. The client may need to liquidate $100,000 of the portfolio at the end of a particular year. The client does not want to invade the initial capital of $1,000,000. The table below summarizes different allocations.
B. 8%
C. 9%
What is the shortfall level, RL?
A. 10%
B. 8%
C. 9%
User Contributed Comments 5
| User | Comment |
|---|---|
| danlan | Shortfall level is the threshold |
| epizi | one has to be careful when more infortion is provided in a question than needed! What is that table for anyway? |
| Farina | to distract you from what the question is asking, a common factor in a lot of CFA questions. |
| TammTamm | I got this one correct. No z-score needed. :) |
| DonAnd | TamTamm you are getting better at this! Impressive! |
I just wanted to share the good news that I passed CFA Level I!!! Thank you for your help - I think the online question bank helped cut the clutter and made a positive difference.
Edward Liu
Learning Outcome Statements
define shortfall risk, calculate the safety-first ratio, and identify an optimal portfolio using Roy's safety-first criterion
CFA® 2024 Level I Curriculum, Volume 1, Module 5.