CAIA constructed response: commands, calculations and case evidence

Try a complete multipart written case

An endowment has $12m in usable liquid assets. It expects $5m of spending and $9m of capital calls before receiving any reliable inflows. The committee is considering an additional illiquid commitment. Ignore transaction costs, restricted assets and other cash flows for this exercise.

Before opening the answer, list the outputs requested: calculation, risk, recommendation and justification. Give each a clear place in your response. This short case teaches response construction; it is not a full official exam set or a calibrated mock.

Match the answer to the command

Read every subpart before drafting. "Identify" asks for the requested item; "explain" asks for a mechanism; "calculate" needs a result with the relevant working and units; "recommend and justify" needs both a choice and support. Do not spend a paragraph defining a familiar term while leaving the actual decision unanswered.

Use concise sentences or bullets when they make the requested outputs clear. Brevity is helpful only if the answer is complete. A bare number can omit direction or units, and a bare recommendation can omit its reason. The table gives answer shapes for study, not a claim about CAIA’s unpublished allocation of marks.

Compare a weak answer with a complete one

A weak answer might say, "The endowment should diversify because liquidity is important and alternatives are long term." It uses relevant vocabulary but never calculates the gap, identifies the immediate consequence or addresses whether to add the commitment. Adding more general prose does not repair those omissions.

A complete response can be much shorter while doing more work. It states the $2m shortfall, connects it to funding needs and uses that fact to justify an action. Review your draft by pointing to the exact line that completes each requested task.

Try a different task: manager evidence

A manager describes a valuation process as independently reviewed. The analyst has a performance presentation and an administrator agreement covering position reconciliation, but no document showing responsibility for valuation review. The committee asks whether the available evidence supports relying on the claim.

This case tests evidence assessment rather than arithmetic. A good response states what is and is not established, requests the missing evidence and explains why it matters. Avoid accusing the manager of fraud when the case establishes only an unresolved documentation gap.

Plan time around the whole written section

Level II assigns 130 minutes to three written-response sets, with 30% of the exam weight attached to constructed response. An equal division is about 43 minutes per set, but actual task demands should guide your practice budget. The arithmetic is a starting point, not an official time limit for each set or subpart.

In rehearsal, record the time used for reading and planning, calculation, drafting and checking. If you repeatedly leave a subpart blank, shorten unnecessary background and outline all requested outputs first. Review whether a difficult calculation is consuming time that could complete another requested explanation. Practise this behavior in full sets, not only isolated short answers.

Use a self-review checklist without inventing a score

Check task completion, factual accuracy, calculation setup, case evidence and clarity. Mark a response as missing, partly developed or complete for your own review, then explain the classification. These labels help choose a repair; they are not CAIA scores, partial-credit rules or a pass predictor.

Keep an example of the original answer beside the revision. Change a case fact and attempt it again without the model answer. That checks whether you learned a decision process rather than a paragraph. The free Level II PDF is a separate MCQ pack; it does not replace written-response practice or the official sample.

• Build writing into a Level II study week