Skip to content

CFA Level I · CFA Level I Exam · Portfolio Management: An Overview

Which of the following return objectives is best described as a well-constructed return objective in an IPS?

The best objective is earning a 6.5% annual return after inflation and taxes to fund retirement spending. It is specific, measurable and linked to the client's needs. Maximizing return or beating the market gives no quantified target tied to goals.

  1. AEarn as high a return as possible
  2. BEarn a 6.5% annual return after inflation and taxes to fund retirement spendingCorrect
  3. CBeat the market

Explanation

A good return objective is specific, measurable, and tied to the client's needs, such as a stated real after-tax return for retirement spending. The others are vague and not measurable relative to client goals.

Did you get it right without looking?

One question tells you little. A timed set on Portfolio Management: An Overview shows your real accuracy, how long you take and where you lose marks.

Practise Portfolio Management: An OverviewFree diagnostic mock

More Portfolio Management: An Overview questions