We often see some task like the following: 4 possible asset allocations, some objectives and constraints
Task: Select the most appropriate asset allocation and state 3 reasons.
To me it is not clear what exactly counts as a reason. Would giving a reason why each of the other portfolio are not appropriate (failing to meet constraint XYZ) be each a separate reason or count as one?
Sometimes it seems to be sufficient to cross each of the other allocations out but I read in an answer to a Schweser mock that reasons for crossing out each of the other would be counted as one reason and they proceeded to give examples of which objectives / constraints the selected allocation actually met.
I would try to come up with separate reasons if you can i.e., if constraint is say vol below 15% and it’s the only one that meets that constraint I wouldn’t say porfolio a has a vol over 15% as one reason and portfolio b has a vol over 15% as a second reason but rather “portfolio c is the only portfolio with a vol below 15%, a stated objective of investor xyz”
If you have 4 possible allocations and stated objectives and constraints, I’m pretty sure it’ll ask you for specific reasons why the 3 do not qualify, and will go so far to tell you to not repeat reasons.
It’s likely there will be some elements in each portfolio option that preclude them from being ideal, all driven from the preceding text: A high cash allocation, an investment in an illiquid asset class, a low Sharpe ratio, a failure to meet a Roy’s Safety First test.