- CFA Exams
- CFA Level I Exam
- Study Session 19. Portfolio Management (2)
- Reading 54. Basics of Portfolio Planning and Construction
- Subject 2. Investment Risk and Return Objectives, and Risk Tolerance
CFA Practice Question
The investment objectives of an investor should be expressed in terms of ______.
A. risk and expected return
B. investment horizon and liquidity concerns
C. legal as well as tax issues
Explanation: In an efficient market, a stock's expected return has built in all the risk factors. Therefore, an investor's task is simply to determine how much risk he or she is willing to take; the markets will determine what the equilibrium rate of return should be at that given level of risk.
User Contributed Comments 1
| User | Comment |
|---|---|
| jpducros | Investments horizons and liquidity concerns are constraints,not objectives |