Standard III (A) is ________.
A. Duty to Employer
B. Disclosure of Conflicts to Employer
C. Obligation to Inform Employer of Code and Standards
D. Disclosure of Additional Compensation Arrangements
E. None of these answers
F. Responsibilities of Supervisors
Data Droid manages several investment accounts and directs most of the client transactions through Lore's brokerage firm. Lore provides him with excellent, reliable research, though his commissions are higher than industry standards. The research is used to manage all the client accounts. Data has just been approached by the Troy brokerage firm, which is a newcomer in the business. While this firm does not provide any research, it charges commissions that are significantly lower than those charged by Lore. If Data decides to stay with Lore's brokerage firm
A. has not violated the code since he has a long-standing relationship with Lore.
B. he has violated the code of ethics, which requires him to keep the expenses to a minimum.
C. has not violated the code if Lore's research justifies the additional expenses.
D. has violated the code by violating the Prudent Man Rule.
Standard IV (A.3) relates to two major components and is titled ________ and Objectivity.
A. None of these answers
B. Impartiality
C. Justice
D. Autonomy
E. Independence
Standard ________ states that the financial analyst must use particular care to maintain independence and objectivity in relationships with issuers of securities.
A. I (B.2)
B. III (B.1)
C. IV (A.3)
D. II (C.4)
E. None of these answers
Steffanie Graff is an investment advisor with Wimbledon Advisors, Inc. She recently obtained her CFA charter, reflected on her new business cards. In a meeting, she told a couple of her new clients something to the effect of the following: "I have a long record of successful investment advises, which have led my client accounts to have an annual return of 32% over the past 3 years. I am sure you will be quite satisfied with my performance." In reality, a large part of this return was caused by a very lucky coincidence wherein one of the penny stocks in a client account registered a 200% increase over a short time due to a takeover. Without this, her client accounts would have averaged less than SandP500 on a risk- adjusted basis. Has Stephanie violated the code of ethics?
A. Yes, because she has misused her CFA charter to imply superior performance.
B. Yes, because the statements misrepresent her track record.
C. Yes, since her presentation of her own performance is in violation of the AIMR-PPP.
D. No, because the statements are factual and she has not promised any future returns.
Under Standard III (E) - Responsibilities of Supervisors - which of the following are NOT responsible for maintaining appropriate supervision when they are in a supervisory role?
A. AIMR members
B. CFA charterholders
C. None of these answers
D. Level I CFA candidates
E. CFA candidates
Regarding beneficiaries and remaindermen, current life-income beneficiaries prefer to receive ________; remaindermen would rather have ________.
A. a minimal current income; a high rate of current income
B. small incremental principal repayments; predictable current income
C. none of these answers
D. growth and stability of principal; a high rate of current income
Neeson Pacino is the senior vice president in the corporate finance arm of Hindenberry Brokerage. Neeson was recently approached by Curare Creators, a pesticide manufacturer. Curare would like to offer new equity to raise capital and has provided Neeson with its current balance sheet and details about the pending projects. Neeson carefully goes over the numbers with a couple of project managersat Curare and also two of his analysts at Hindenberry. He concludes from these discussions that the numbers presented by Curare are overly optimistic. The revised numbers would seriously lower the offering price. Not relishing this prospect, Neeson decides to go ahead with the numbers as drawn up by Curare and directs the department to prepare the IPO with the offering price. Neeson has
A. violated Standard IV (A.1) - Reasonable Basis and Representations.
B. violated Standard IV (B.3) - Fair Dealing.
C. violated Standard IV (B.1) - Fiduciary Duties.
D. violated Standard II (B) - Duty to the Employer.
Information is ________ if its disclosure would be likely to have an impact on the price of a security or if reasonable investors would want to know the information before making an investment decision.
A. inside information
B. none of these answers
C. breached
D. secured
E. material
F. tipable
Amartya is currently managing the investment fund for a charitable institution and has his fiduciary duties bound by the UMIFA (Uniform Management of Institutional Funds) rules. His colleague, Bhagwati, is a trustee of a personal trust fund set up by the late R. D. Tata, a famous industrialist. Which of the following is/are true about this situation?
I. Amartya's behavior as a trustee is governed by the "Prudent Man Rule."
II. Bhagwati is held to a standard of ordinary business care.
III.
In general, Amartya is held to a lower standard of professional conduct than Bhagwati.
A.
III only
B.
I and II only
C.
I, II and III
D.
I only
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