Learning Outcome Statements

1. The Investment Policy Statement and its Major Components

a. describe the reasons for a written investment policy statement (IPS);

b. describe the major components of an IPS;

2. Investment Risk and Return Objectives, and Risk Tolerance

c. describe risk and return objectives and how they may be developed for a client;

d. distinguish between the willingness and the ability (capacity) to take risk in analyzing an investor's financial risk tolerance;

3. Investment Constraints

e. describe the investment constraints of liquidity, time horizon, tax concerns, legal and regulatory factors, and unique circumstances and their implications for the choice of portfolio assets;

4. Portfolio Construction

f. explain the specification of asset classes in relation to asset allocation;

g. describe the principles of portfolio construction and the role of asset allocation in relation to the IPS.