Private wealth management All comments from CFAI EOC questions Time horizon Final question. 13 B i. I understand that the time horizon is two stages, the next 18 years and the second stage beginning with their retirement. Q – could a case be made for a 3rd time horizon, being the 5 years where the children are in college? I read in the text that a time frame from 3 to 15 years is defined as an intermediate time frame. Liquidity No positive liquidity events were considered in the CFAI questions. However, they are referred to in the text. Are you guys going to mention them? An example of a positive liquidity event is an inheritance. Investable assets I noticed that gold was excluded from investable assets in the Inger example. I’m guessing it is excluded as it is not liquid enough to be included as investable assets? Any thoughts? Any thoughtful comments appreciated.

For gold part. “He believes that gold provides a viable hedge against catastrophic economic surprises and plans to maintain his current holding (€500,000) for the foreseeable future” P.101. => he want to keep it and not liquidate it for investment.

For 13B: I think the implication is they’re liquidating a portion of the portfolio & using the proceeds to pay cash up-front for the kid’s college education, i.e. it’s not an ongoing expense that needs to be met from the portfolio income. Which is why you wouldn’t carve out a 3rd time horizon. For liquidity: in the EOC problems & past exams, they always seem to think in terms of cash outflows. So, a chunk of $$ coming in gets mentioned elsewhere (e.g. risk tolerance or time horizon). I guess if they have an upcoming liquidity need, you would have to net any cash inflows like an inheritance. For the Ingers: good catch, maybe the gold’s excluded b/c Peter plans to maintain the current holding? (p. 101 under “Personality”). So, the advisor can’t reallocate.