is maximum return volatility a portfolio objective or constraint?

Setting a maximum return volatility of 15% on a portfolio is an example of:

  1. portfolio objective.
  2. portfolio diversification.
  3. asset allocation.
  4. security selection.

answer C. Setting a cap on return volatility is an example of a constraint within asset allocation. Security selection deals with choosing specific investments for the portfolio. Objectives deal with maximizing value or meeting returns targets. Diversification is a concept of diminishing risk from adding securities to a portfolio with low correlation with existing portfolio assets.

I have always thought that return and risk is part of portfolio objective and not constraint. Is this question wrong?

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Risk and return are objectives.

Time horizon, liquidity, taxes, laws and regulations, and unique circumstances are constraints.

C wasn’t an answer choice.

Sorry. It’s abc instead 123 if you need to be pedantic…