QUESTION: 145

Which of the following UK Stewardship Code principles is not addressed in the European Fund and Asset Management Association (EFAMA) Code? The principle that institutional investors should:

monitor their investee companies
report periodically on their stewardship and voting activities
have a robust policy on managing conflicts of interest in relation to stewardship

Answer(s): B

Explanation:

The UK Stewardship Code and the European Fund and Asset Management Association (EFAMA) Code both aim to enhance the quality of stewardship and engagement by institutional investors. However, there are some differences in the principles they address.

1. UK Stewardship Code Principles: The UK Stewardship Code outlines several principles for institutional investors, including monitoring investee companies, managing conflicts of interest, and reporting on stewardship and voting activities.

2. EFAMA Code Principles: The EFAMA Code, while similar in many respects, does not explicitly address all the principles covered by the UK Stewardship Code. One of the key differences is the requirement for institutional investors to report periodically on their stewardship and voting activities.

3. Reporting on Stewardship and Voting Activities: The UK Stewardship Code emphasizes the importance of transparency and accountability by requiring institutional investors to report periodically on their stewardship and voting activities. This principle is not explicitly addressed in the EFAMA Code, making it a notable difference between the two frameworks.

Reference from CFA ESG Investing:

Stewardship Codes: The CFA Institute highlights the importance of stewardship codes in promoting responsible investment practices.
While both the UK Stewardship Code and the EFAMA Code encourage active engagement and monitoring of investee companies, the UK code places a stronger emphasis on reporting and transparency in stewardship activities.

Transparency in Stewardship: Reporting on stewardship and voting activities is crucial for ensuring that institutional investors are accountable to their beneficiaries and stakeholders. The UK Stewardship Code's focus on this principle underscores its commitment to enhancing the quality and transparency of stewardship practices.

In conclusion, the principle that institutional investors should report periodically on their stewardship and voting activities is not addressed in the EFAMA Code, making option B the verified answer.

Reveal Solution Next Question

QUESTION: 146

Compared with younger people, older people are more likely to have:

lower accumulated savings and spend less on consumer goods.
higher accumulated savings and spend less on consumer goods.
higher accumulated savings and spend more on consumer goods.

Answer(s): B

Explanation:

Older people generally have higher accumulated savings compared to younger people due to longer periods of saving and investment. However, they tend to spend less on consumer goods. This pattern is influenced by factors such as a reduction in consumption needs, increased focus on healthcare, and other services as they age.

Reveal Solution Next Question

QUESTION: 147

Which of the following ESG screening methodologies is most likely to result in a well-diversified portfolio? Screening on:

a relative basis only.
an absolute basis only.
both a relative basis and an absolute basis.

Answer(s): C

Explanation:

Using both relative and absolute ESG screening methodologies is most likely to result in a well- diversified portfolio. Relative screening compares companies against their peers within the same sector, while absolute screening applies fixed criteria across all companies regardless of their sector. Combining both methods ensures a broad and diverse portfolio by balancing sector-specific risks and universal ESG standards.

Reveal Solution Next Question

QUESTION: 148

Which of the following would most likely be the initial step when drafting a client's investment mandate?

Defining how to measure ESG performance
Clarifying the client's ESG investment beliefs
Defining how to measure financial performance

Answer(s): B

Explanation:

The initial step when drafting a client's investment mandate should be clarifying the client's ESG investment beliefs. This foundational step helps in defining the client's values, objectives, and priorities related to ESG, which will guide the entire investment strategy and ensure that it aligns with the client's expectations and goals.

Reveal Solution Next Question

Free ESG-Investing Exam Braindumps (page: 37)

QUESTION: 145

Explanation:

QUESTION: 146

Explanation:

QUESTION: 147

Explanation:

QUESTION: 148

Explanation: