What is the primary objective of investment policy planning?
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Investment policy planning defines guidelines to align investment decisions with client goals.
Which document outlines investment objectives and constraints?
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The investment policy statement details objectives, constraints, and strategies.
What is asset allocation in investment planning?
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Asset allocation distributes investments among asset classes to balance risk and return.
Why is diversification important in investment portfolios?
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Diversification reduces risk by spreading investments across different assets.
What role does risk tolerance play in investment planning?
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Risk tolerance determines the level of risk an investor is willing to accept.
Which strategy seeks to balance risk and return dynamically?
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Tactical asset allocation adjusts allocations based on market conditions.
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What is the importance of periodic portfolio review?
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Reviews ensure the portfolio remains aligned with investment objectives.
Which factor affects liquidity needs in investment planning?
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Liquidity needs depend on an investor’s cash requirements and time horizon.
What is rebalancing in portfolio management?
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Rebalancing adjusts portfolio holdings to maintain target allocations.