I can see why C(Liquidity) is the element has to be included in the IPS, because the unique liquidity needs the client will be facing in the long time that require extra care. My question is why choice A is wrong, as far as I know that risk tolerance, which indicates both the ability and perception is also a crucial element when fund manager drafts the IPS. Why the answer chooses liquidity over risk as necessary element to form the IPS??
Hah I too used to get this question wrong until I read the case properly. If you read carefully, he is drafting the “investment objectives “ section for him. And that’s why the charitable pledge comes and not moderate risk tolerance as he wants portfolio to earn enough allowing him to make the charity.
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thx for sharing your thoughts, i’ve learned by watching the videos i thought outdated( the instructor went through the materials used up to 2019).
Yeah this is an example of question wording not factual substance. Risk tolerance is of course in the IPS. This question just slipped some trick wording in to check how closely we are reading. The key words are “the section of the IPS she is drafting.”