CFA Practice Question

There are 221 practice questions for this study session.

CFA Practice Question

Which of the following items would not generally be addressed when constructing an investment policy?
A. The required rate of return expected for the risk that's being taken.
B. Credit rating above which securities may be considered.
C. Allowable margins within which the manager may deviate from the original asset mix.
Explanation: While the investment policy will discuss the type of returns that are expected (i.e., growth, income, or income and growth), it is not often that a specific expected return is incorporated into the policy statement.

User Contributed Comments 7

User Comment
CoffeeGirl Required rate of return is not mentioned in the investment policy statement.
dini85 Coffeegirl is correct
leon121 Really? I guess it totally differs in the real world. I've seen too many non profits state that they want X return...
rlabog I worked for a firm that had expected return and tracking error ranges baked into the IPS. I guess required rate of return is a specific instance.
xemex131 are you serious? what is absolute/relative return target in an IPS then?
lighty0770 Professors note LOS 46.e: ...we memorizeed R-R-T-T-L-L-U as a checklist for addressing the important points of portfolio construction, and it still works today. Then, as now, the important points to cover in an IPS were risk, return, time horizon, tax situation, liquidity, legal restrictions, and unique constraints of a specific investor...

I believe risk and return are items 1 and 2 of the IPS so I am not following how that is the right answer.
gigi0818 I’m not following....
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