When formulating an investment policy for a client, which of the following falls under "investor objectives?"
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A. B. C. D. E. F.C
Risk tolerance is considered under "investor objectives." Liquidity needs, time horizon, proxy voting and investable funds are considered under "investor constraints."
When formulating an investment policy for a client, the investor objectives refer to the specific goals and targets that the client wants to achieve with their investments. These objectives help guide the investment strategy and decisions. Let's go through each answer choice to determine which ones fall under "investor objectives":
A. Investable funds: This answer choice does not directly relate to investor objectives. Investable funds refer to the amount of money that the client has available for investment. While the investable funds may influence the investment strategy, it is not considered an objective itself.
B. Time horizon: This answer choice falls under investor objectives. The time horizon represents the length of time that the client plans to invest their funds before needing to access them. It is an essential factor in determining the appropriate investment strategy. Different time horizons may require different asset allocation and risk profiles.
C. Risk tolerance: This answer choice falls under investor objectives. Risk tolerance refers to the client's willingness and ability to bear investment risk. It reflects their comfort level with potential fluctuations in the value of their investments. Risk tolerance is an important consideration in setting investment objectives and determining the suitable asset allocation.
D. Proxy voting: This answer choice does not fall under investor objectives. Proxy voting refers to the process of voting on behalf of shareholders in a company's annual general meeting. While proxy voting may be a consideration within the overall investment policy, it is not an investor objective in itself.
E. Liquidity needs: This answer choice falls under investor objectives. Liquidity needs refer to the client's requirement for immediate or near-term access to their funds. It is an important consideration when determining the appropriate investment strategy. Clients with higher liquidity needs may require more liquid investments.
F. None of these answers: This answer choice is incorrect because both time horizon and risk tolerance fall under investor objectives.
To summarize, the answer choices that fall under "investor objectives" are: