SECTION 6.2.2. LO.F. COPYRIGHT © IFT. ALL RIGHTS RESERVED. PAGE 3 COPY...

1. C is correct. Both Carla and Sima are wrong about the investment policy statement. The IPS should identify pertinent investment objectives and constraints for a particular investor. “Clearly identified objectives and constraints ensure that the policy statement is accurate and relevant to the investor’s specific situation and desires. The IPS provides a long-term plan for an investor and a basis for making disciplined investment decisions over time. The absence of an investment policy statement reduces decision making to an individual-event basis and often leads to pursuing short-term opportunities that may not contribute to, or may even detract from, reaching long-term goals.” Section 5.1. LO.c.