Cash reserve and liquidity needs

CFA Level III Portfolio Management
#1

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

Thanks

#2

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

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

#3

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.

#4

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?

Thanks.

#5

Emergency reserve is never a part of investable assets.