Page 15 - FINAL CFA I SLIDES JUNE 2019 DAY 11

Cash Management Investment Session Unit 11:
38. Working Capital Management
Policy, p86

• Objective of cash management -earn a market return without taking on much risk, either liquidity

risk or default risk. We need a written investment policy statement (IPS), which addresses:

• purpose and objective of the investment portfolio,
• strategy to be employed to achieve those objectives,

• types of securities that will be used
• who is responsible for the purchase securities and for complying with guidelines and how
tanties
will non-compliance be managed?
• limitations on the specific types of securities permitted and credit ratings of portfolio

securities, and

IPS and should not be overly restrictive in the context of meeting the goals of safety and
liquidity and should be constantly evaluated for efficacy.