INV 101: Liquidity constraints belong in asset allocation
Expected return and volatility do not fully describe whether a portfolio can fund liabilities on time. Some assets may be difficult to sell or subject to stress-related cash demands.
Original practice scenario
In an original scenario, a portfolio has adequate total value but significant claims due next month. Map cash maturities and liquid assets against obligations, then consider stressed sale values. Explain the return trade-off from holding more liquidity rather than assuming market value is immediately available cash.
Study check
Write the assumptions, the decision being supported and one limitation. Use the current course syllabus for the required terminology and scope; this introductory guide is not a complete course summary.
Reading sources
ActNet editorial guide · October 1, 2026 · Original illustrative examples.