Chartered Investment Manager (CIM) Practice Exam · Question
Which of the following best describes the primary objective of strategic asset allocation?
Strategic asset allocation is a long-term plan designed to meet a client's objectives and risk tolerance by establishing target percentages for various asset cl
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Question: Which of the following best describes the primary objective of strategic asset allocation?
Answer options:
- To exploit short-term market inefficiencies by quickly shifting between asset classes. ✅ To align the portfolio's long-term risk and return characteristics with the client's investment objectives and constraints.
- To make frequent, opportunistic adjustments based on economic forecasts.
- To minimize transaction costs by avoiding any portfolio changes for extended periods.
Correct answer: To align the portfolio's long-term risk and return characteristics with the client's investment objectives and constraints.
Explanation: Strategic asset allocation is a long-term plan designed to meet a client's objectives and risk tolerance by establishing target percentages for various asset classes. It reflects the investor's fundamental risk profile and return requirements rather than short-term market views.
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