Q1. Which two constraints greatly impact an individual’s investment policy statement?

A)   Legal/regulatory and unique circumstances.

B)   Legal/regulatory and liquidity concerns.

C)   Time horizon and tax considerations.

Q2. With respect to the constraints portion of an investor’s investment policy statement, issues relating to on-going expenses, emergency reserves, alterations in on-going expenses, and transactions costs are all examples of:

A)   time horizon issues.

B)   liquidity issues.

C)   unique circumstances.

Q3. Vivian Collins is a client of ESP Financial Advisors. She presents her situation as follows: Collins is currently a divorced mother to a 5-year-old daughter, Daija. She is 35 years old. She has worked at her current job with the government for the last 13 years, and assumes that she will remain there until retirement and collect her pension. Collins wants to be able to send Daija to the college of her choice. Collins expects her daughter to eventually marry and have children. She would love to be able to leave something to these future grandchildren. How many time horizons does Collins have?

A)   3.

B)   5.

C)   4.

Q4. Which class of liquidity constraints is usually NOT considered a factor when formulating an individual’s investment policy statement?

A)   Cash carried on the person.

B)   Negative liquidity events.

C)   Ongoing expenses.

Q5. Although legal and regulatory constraints do not usually impact an individual investor’s policy statement, attention must often be paid between two parties of personal trusts. Which parties exhibit the greatest tension in setting investment policy for a personal trust?

A)   Grantor and remaindermen.

B)   Income beneficiary and remaindermen.

C)   Income beneficiary and the trust officer.

答案和详解如下：

Q1. Correct answer is C)

Individual investors have finite lives and are taxable entities. Legal/regulatory factors may have an impact, but for the most part, individual investors can invest in almost any manner they please.

Q2. Correct answer is B)

The issues listed in the stem of the question are concerned with the investor’s liquidity requirement.

Q3. Correct answer is C)

Collins has 4 distinct time horizons. The first is now until the time that Daija enrolls in college. The second is supporting Daija's college education. The third is her remaining years before retirement and after supporting Daija through college. The fourth is retirement. In retirement if a goal is to leave some assets to her grandchildren then the portfolio would need to be managed with that in mind.

Q4. Correct answer is A)

The amount of cash an investor carries with them should not impact the investment policy statement. The primary liquidity constraints impacting the long-term policy statement are those cash outflows required in meeting ongoing expenses and negative liquidity events.

Q5. Correct answer is B)

A creative tension exists between the income beneficiary and remaindermen listed in a personal trust. Income beneficiaries would like to have as much current income from the trust as possible. Remaindermen wish to have as large of a portfolio passed to them after the income beneficiary dies. The conflict between current income and longer-term portfolio growth is a situation that must be addressed in formulating investment policy for a personal trust.

Thank you!