HI all, Question regarding ‘Return Objective’ part of IPS. 1) I notice that the actual required return is often not calculated in the answer. Would it be ok to state that it is more important to describe the client’s situation than his/her actual required return? 2) I understand that the investor’s constraints determine the Risk and Return objectives. However, are you required to mention specifics in the return/risk section that you have already mentioned in the constraints section? This is often the case in curriculum answers but the approach is not consistent. Thanks.
-
Yeah, the CFAI reading doesn’t do a great job of preparing you for what the exam questions look like when it comes to return objectives. I would say your best bet is to get a look at some prior exams and see how they handle Individual/Institutional portfolio managment questions. You’ll be directed by keywords in bold which will tell you exactly how to answer the question. In all the past exams I did, calculating a return was involved in some form or another. That being said, being able to describe the client situaton is also critically important.
-
Yes. Risk especially is driven off the constraints. Again, I would review some prior exams to get familiar with how these questions are approached. It’s far more linear/stripped down than it seems in the CFAI readings.
They sometimes ask you to calculate return requirements nominal or real and show your work. Absolutely.
Totally with Itj: review prior exams.