QUESTION: 397

Arvantis works for Quick-time Brokerage. He has not been happy with his employment for some time and recently decided to start his own hedge fund. He started making administrative preparations for setting up the fund while still working for Quick-time Brokerage. He also made contact with a few of his oldest clients and gave them details about his hedge fund. The clients promised to switch accounts once the fund was initiated.
Arvantis has:

violated Standard III (B) - Duty to Employer by making preparations to enter a competitive business while still being employed with Quick-time Brokerage.
II. violated Standard III (B) - Duty to Employer by soliciting Quick-time Brokerage's clients while still being employed with Quick-time Brokerage.
III. not violated Standard III (B) - Duty to Employer.
I only
II only
I and II
III only

Answer(s): B

Explanation:

Standard III (B) - Duty to Employer - does not preclude a departing employee from making arrangements to enter independent practice prior to leaving current employment, as long as such preparations do not constitute a breach of loyalty toward the employer. However, undertaking any activity that harms the current employer is a violation of III (B).

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QUESTION: 398

To fulfill the duty to inform their employer that they must follow AIMR's Code and Standard, members must:

inform their immediate supervisor in writing.
inform their immediate supervisor either orally or in writing.
inform the firm's chief executive officer in writing.
inform the firm's chief executive officer either orally or in writing.

Answer(s): A

Explanation:

This question relates to a member's duty to inform his/her employer of the Code and Standards. The proper method to do so is in writing and through the member's direct supervisor.

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QUESTION: 399

With regard to international portfolios, if net performance is indicated, managers are required to disclose the assumed ________ for the benchmark.

tax rate
currency effects
hedge
disclosure
differentials

Answer(s): A

Explanation:

To be in compliance with the AIMR-PPS, the performance presentation for international portfolios must disclose whether composites and benchmarks are presented gross or net of withholding taxes on dividends, interest and capital gains; if net, the assumed tax rate for both the composite and the benchmark.

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QUESTION: 400

Investments-R-Us is a growing investment advisory firm, which recently hired 5 CFA charter-holders for senior management positions. In an advertisement, the firm promised clients excellent client service and timely investment advice. To bolster this motto, all 5 CFA charter-holders were praised in the advertisement for their commitment, professionalism and high intelligence displayed in passing the CFA program in 3 straight attempts. IRU has

violated the AIMR Presentation Standards by selectively presenting its expertise in the field.
violated Standard II (A) - Use of Professional Designation - by implying superior results based on the fact that the CFA charter-holders passed every exam in first attempt.
none of these answers.
not violated any of standards in the AIMR code.

Answer(s): B

Explanation:

Implications that CFA Charter-holders who pass their exams in the first attempt can generate superior results or display a higher level of intelligence are considered inappropriate by Standard II (A) of the AIMR Code of Ethics.

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QUESTION: 397

Explanation:

QUESTION: 398

Explanation:

QUESTION: 399

Explanation:

QUESTION: 400

Explanation: