Cash reserve and liquidity needs

Should cash reserve mentioned in liquidity requirement only for coming year or should it apply to every year?


usually the question asks “Formulate the liquidity requirement for the following year”

So, if it is a part of the following year, then yes!

CFAI Volume 2 Reading 9 page 176 states that keeping an emergency reserve that covers 3 month to more than one year of expenses is highly advisable as a precaution against unaniticpated events such as sudden unemployment or uninsured losses. As such, this should typically apply for the coming year.

Ok thanks.

Another question: Is emergency reserve part of investable assets? I’d assume yes to cash equivalents? hence it should be part of investable asset in return calculation?


Emergency reserve is never a part of investable assets.