As a portfolio manager and in the aim of defining the preliminary list of components to be included in your portfolio, which will serve as a starting point for developing a portfolio. You start by…

Question

Options

• ACreate a basis for decision making
• BCreate portfolio scenarios
• CProvide a guiding framework to operationalize the organizational strategic goals and objectives
• DUnderstand the strategic priorities

• B
  87% (13)
• C
  7% (1)
• D
  7% (1)

Explanation

When a portfolio manager reviews documentation such as business plans and proposals to identify existing and potential portfolio components, the purpose is to create portfolio scenarios. Portfolio scenarios are developed by combining different mixes of proposed components to evaluate trade-offs and determine which combination best supports the organizational strategy given constraints such as budget, resources, and risk tolerance. Option A (creating a basis for decision making) is too generic. Option C (providing a guiding framework) describes the purpose of the Portfolio Strategic Plan itself. Option D (understanding strategic priorities) is an input activity, not the output of reviewing component proposals. Creating scenarios allows the portfolio manager to model different portfolio configurations before making final component selection decisions.

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