CFA Level I · CFA Level I Exam · Basics of Portfolio Planning and Construction
A foundation's investment policy requires that the portfolio exclude tobacco and weapons producers, based on its mission. This requirement is best described as a:
This is a unique circumstance. Mission-based exclusions such as avoiding tobacco and weapons producers are particular preferences or restrictions that limit the investable universe. They are unrelated to the foundation's need for cash or to the tax treatment of its returns.
- Aliquidity constraint
- Btax constraint
- Cunique circumstanceCorrect
Explanation
Preferences such as socially responsible exclusions or ethical screens are unique circumstances in the IPS. They are neither about cash needs (liquidity) nor about tax treatment. They restrict the investable universe.
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