CFA Practice Question

CFA Practice Question

A policy statement ______

I. helps set realistic investment goals.
II. creates the standards by which a portfolio manager is judged.
III. provides discipline to the investment process.
IV. allows monitoring of a portfolio in relation to prevailing economic conditions.
A. I, III and IV
B. I, II and III
C. I, II and IV
Explanation: A policy statement is intended as a guide to the investment process, serving to identify and set realistic goals. This also creates a yardstick by which a portfolio manager can be judged when it comes to performance evaluation. Monitoring of a portfolio with respect to changing market conditions, however, is not part of the policy statement.

User Contributed Comments 4

User Comment
dimanyc I believe the policy statement does include monitoring portfolio perf-ce, only not with respect to changing mkt conditions, but against a defined benchmark. At least that's the reason why i did not choose IV. Am i wrong?
ontrack Policy is used to define what is the required outcome and methods of achieving it. Monitoring is the second aspect and we can look at them separately
takor Aren't the investment goals supposed to be outlined in the policy statement? How does it then helps to set realistic investment goals? I am not clear with I
mekc monitoring is an activity therefore outwith policy statment.
You need to log in first to add your comment.