CFA Level I · CFA Level I Exam · Basics of Portfolio Planning and Construction
In an investment policy statement (IPS), the section that sets out the client's return objective and risk tolerance is most likely part of the:
The return objective and risk tolerance belong in the investment objectives section of the IPS. This section states what return the client needs and how much risk the client can and will accept, and it guides every later decision on constraints, asset allocation and monitoring.
- AInvestment objectivesCorrect
- BRebalancing schedule
- CFee schedule
Explanation
The IPS states objectives, which cover the return requirement and risk tolerance (ability and willingness). Rebalancing and fees are administrative or implementation items, not the statement of what the client wants to achieve.
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