CFA Practice Question
A policy statement ______
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.
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. |