CFA Institute CFA Institute Certifications CFA-LEVEL-1 Questions & Answers

• Question 3671:

  When formulating an investment policy for a client, which of the following falls under the category "client identification?"

  A. risk tolerance

  B. none of these answers

  C. type and nature of clients

  D. expected cash flows

  E. investable funds

  Correct Answer: C

  "Client identification" requires that the type and nature of clients be considered. Risk tolerance is considered under "investor objectives." Investable funds and expected cash flows are considered under "investor constraints."

• Question 3672:

  Standard IV (B.1) clearly states that ________ owe undivided loyalty to their clients and must place client interests before their own.

  A. AIMR members

  B. supervisors

  C. none of these answers

  D. fiduciaries

  E. analysts

  Correct Answer: D

  Standard IV (B.1) - Fiduciary Duties states that "In relationships with clients, members shall use particular care in determining fiduciary duty and must act for the benefit of their clients and place their clients' interests before their own." "Fiduciaries" is the best answer.

• Question 3673:

  Access or covered persons are discussed in detail under which of the following standards?

  A. Prohibition against Plagiarism

  B. Responsibilities of Supervisors

  C. None of these answers

  D. Priority of Transactions

  E. Fundamental Responsibilities

  F. Professional Misconduct

  G. Disclosure of Conflicts to Employer

  H. Professional Misconduct

  Correct Answer: D

  Access or covered persons are dealt with under the compliance procedures of Standard IV (B.4), Priority of Transactions.

• Question 3674:

  When formulating an investment policy for a client, which of the following falls under the category "client identification?"

  A. risk tolerance

  B. time horizon

  C. expected cash flows

  D. the existence of separate beneficiaries

  E. none of these answers

  Correct Answer: D

  "Client identification" requires that the existence of separate beneficiaries be considered. Risk tolerance is considered under "investor objectives." Time horizon is considered under "investor constraints."

• Question 3675:

  Hercules Poirot has just received the AIMR letter, informing him that he has passed the Level III exam in the CFA program. He changes his resume to reflect this information. The header now says, "Hercules Poirot, CFA," the "CFA" written in a smaller font. With respect to Standard II (A) - Use of Professional Designation - if Hercules circulates this resume, he will:

  A. have violated Standard II (A). He cannot use the CFA designation till AIMR informs him that he has earned the charter.

  B. have violated Standard II (A). He cannot put the CFA designation on his business card immediately after his name.

  C. have violated Standard II (A). He cannot claim to be a CFA till he obtains the final diploma from AIMR.

  D. not have violated Standard II (A).

  Correct Answer: A

  A candidate earns a CFA charter only after he has passed all 3 exams and has accumulated sufficient professional experience to satisfy the requirements of the program. Till the ICFA Board approves his candidacy, Hercules cannot use the designation, "CFA."

• Question 3676:

  Relationships with and Responsibilities to the Profession are dealt with under:

  A. Standard II

  B. Standard IV

  C. None of these answers

  D. Standard I

  E. Standard V

  F. Standard III

  Correct Answer: A

  Relationships with and Responsibilities to the Profession are dealt with under Standard II.

• Question 3677:

  Which AIMR standard states that members must inform employers of their duty to comply with the Code and Standards and must deliver a copy to their employers?

  A. IX

  B. IV

  C. III A

  D. II A

  Correct Answer: C

  Standard III (A) Obligation to Inform Employer of Code and Standards states: Members shall: "(1) Inform their employer in writing, through their direct supervisor, that they are obligated to comply with the Code and Standards and are subject to disciplinary sanctions for violations thereof, and (2) Deliver a copy of the Code and Standards to their employer if the employer does not have a copy."

• Question 3678:

  The procedures for compliance with Standard IV (B.8), Disclosure of Referral Fees, recommend that you disclose all referral agreements ________.

  A. at least orally

  B. any of these answers

  C. orally or in writing

  D. in writing

  Correct Answer: D

  Under Standard IV (B.8), members should disclose all agreements in order to be in compliance. Members should disclose, in writing, the existence and terms of any referral agreement to any client or prospective client as soon as the member learns that the client or prospective client has been referred by a firm receiving a referral fee.

• Question 3679:

  When taking on a new affiliation while working for his present employer, a member should:

  A. notify his employer in writing and obtain written consent.

  B. notify any prospective affiliation of his present employer.

  C. not render services to a new client until the client gives consent in writing.

  D. all of these answers are correct.

  Correct Answer: D

  The procedures for compliance with Standard III (B) state that members should not render services until receiving written consent from their employer to all of the terms of the arrangement, after having provided written statements describing the types of services to be rendered to independent affiliations. A member should also disclose to prospective clients the identity of the member's employer and clarify that the member is performing independently of the employer. The member should not render services until the client gives consent in writing indicating that the client has read and understood the member's written disclosure statement.

• Question 3680:

  Standard IV (B.2) deals with ________.

  A. compensation

  B. fair dealing

  C. soft dollars

  D. competition

  E. none of these answers

  F. suitability

  G. proxy voting

  H. disclosure of conflicts

  Correct Answer: F

  Standard IV (B.2) deals with the appropriateness and suitability of investment recommendations for each portfolio or client.