Asset Allocation with Real-World Constraints
Free CFA Level III: Portfolio Management lesson in Asset Allocation. 24 min read, ~3,633 words.
Every real constraint moves the portfolio away from the efficient frontier, the question is whether the deviation is justified. Asset size determines which asset classes are accessible (minimums for small, market impact for large). Liquidity constraints tighten during stress, exactly when liquidation costs are highest. Taxes are the most impactful...
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What this lesson covers
- Content
- Example 1
- Example 2
- Common Mistakes
- Key Takeaways
- Exam Shortcuts
Learning objectives
- real world constraints
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