Answer: An annual tracking risk of less than 2 percent

**Explanation:** A relative risk objective measures risk relative to a benchmark or reference point. Among the options: 1. **Option A: An annual tracking risk of less than 2 percent** - This is a relative risk objective because tracking risk (also known as tracking error) measures the standard deviation of the difference between portfolio returns and benchmark returns. It's explicitly relative to a benchmark. 2. **Option B: A 12-month 95% value at risk less than $1,000,000** - This is an absolute risk objective. Value at Risk (VaR) measures the maximum potential loss in value of a portfolio over a defined period for a given confidence interval, without reference to any benchmark. 3. **Option C: Maintaining at least $10,000 in cash for planned monthly withdrawals** - This is a liquidity constraint or cash flow requirement, not a risk objective. In portfolio management and Investment Policy Statement (IPS) development, relative risk objectives are typically expressed in terms of tracking error, information ratio, or other metrics that compare portfolio performance or risk to a benchmark. Absolute risk objectives are expressed in terms of total portfolio risk measures like standard deviation, VaR, or maximum drawdown without reference to a benchmark. Therefore, only Option A represents a relative risk objective.

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