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11. - CFA 2018 LEVEL 2 PORTFORLIO QUESTION BANK R47 THE PORFOLIO MANAGEMENT PROCESS AND THE IPS Q BANK 11. - CFA 2018 LEVEL 2 PORTFORLIO QUESTION BANK R47 THE PORFOLIO MANAGEMENT PROCESS AND THE IPS Q BANK
CFA 2018 LEVEL 2 PORTFORLIO QUESTION BANK R47 THE PORFOLIO MANAGEMENT PROCESS AND THE IPS Q BANK
11. Given the client’s investment policy objectives, which of the following is least likely to be considered by Vlahd? A. Inflation rates. B. Tax rates. C. Benchmark returns. The following information relates to questions 12 – 13. Peter Chan, investment advisor at Helmut Capital, meets with a client and describes the first step of the portfolio management process – the planning step, which comprises of four parts: I - identify the investment objectives and constraints II - create an investment policy statement III – develop a long-term market strategy IV - determine a strategic asset allocation Chan’s client is a private university with a newly formed endowment fund that has just received a donation of $100 million to provide scholarships to students. The endowment will continue to receive funds in future to support its scholarship program related expenses in perpetuity. Chan makes the following recommendations regarding the endowment fund portfolio’s objectives and constraints to his portfolio manager:

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I. The endowment requires a rate of return that will that will cover annual spending, investment expenses, and expected inflation. II. The investor’s ability to take risk is average to above average because of its large asset base and inflow of additional funds in future, but prefers low to moderate volatility determined by its spending needs. III. The time horizon is short because of annual payment of expenses.