QUESTION: 265

Albert and Tye, who recently started their own investment advisory business, have registered to take the Level III CFA examination. Albert's business card reads, "Judy Albert, CFA Candidate." Tye has not put anything about the CFA designation on his business card, but promotional material that he designed for the business describes the CFA requirements and indicates that Tye participates in the CFA Program and completed Levels I and II. According to the Standards:

Albert has violated the Standards but Tye has not.
Neither Albert nor Tye had violated the Standards.
Tye has violated the Standards and Albert has not.
Both Albert and Tye have violated the Standards.

Answer(s): A

Explanation:

The question deals with Standard II (A), Use of Professional Designation. Candidates may not use the designation in any form prior to actually obtaining their charter. Therefore, Albert has violated Standard II (A).
Candidates may communicate that they are participating in the CFA Program, however and may state the levels that they have completed. Therefore, Tye has not violated Standard II (A).

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QUESTION: 266

An investment management firm has been hired by ETV Corporation to work on an initial public offering for the company. The firm's brokerage unit now has a sell recommendation on ETV, but the head of the investment banking department has asked the head of the brokerage unit to change the recommendation from sell to buy. According to the Standards, the head of the brokerage unit would be permitted to:

Increase the recommendation by no more than one increment (in this case, to a hold recommendation).
Assign a new analyst to decide if the stock deserves a higher rating.
Place the company on a restricted list and give only factual information about the firm.
Reassign responsibility for rating the stock to the head of the investment banking unit.

Answer(s): C

Explanation:

This question relates to Standard IV (A.3), Independence and Objectivity. When asked to change a recommendation on a company stock to gain business for the firm, the head of the brokerage unit must refuse in order to maintain his independence and objectivity in making the recommendation. To avoid the appearance of a conflict of interest, the firm should discontinue issuing recommendations about the company. Changing the recommendation in any manner is a violation of the member's duty to maintain independence and objectivity.
Assigning a new analyst would not address the conflict of interest. Reassigning responsibility for the stock to the head of investment banking would actually exacerbate the conflict.

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QUESTION: 267

Which of the following is/are a correct statement of a member's duty under the Code and Standards?

In the absence of specific applicable law or other regulatory requirements, the Code and Standards govern the member's actions.
II. A member is required to comply only with applicable local laws, rules, regulations, or customs even though the AIMR Code and Standards may impose a higher degree of responsibility or a higher duty on the member.
III. A member who trades securities in a foreign securities market where no applicable local laws or stock exchange rules regulate the use of material nonpublic information may take investment action based on material nonpublic information.
I only.
III only.
I and II only.
II and III only.

Answer(s): A

Explanation:

This question pertains to Standard I, Fundamental Responsibilities - specifically, international application of the Code and Standards. If applicable law is more strict than the requirements of the Code and Standards, members must adhere to applicable law, otherwise, members must adhere to the Code and Standards - thus, I is correct. Members must adhere to the higher standard set by the Code and Standards if local applicable law is less strict- thus, II is incorrect. When no applicable law exists, the Code applies - thus, III is incorrect.

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QUESTION: 268

With regard to calculation of returns for international portfolios, a consistent source of ________ should be used.

exchange rates
trades
settlements
disclosures
taxes

Answer(s): A

Explanation:

Whenever the currency overlay manager is notified of changes in the underlying currency exposures as a result of a shift in the underlying assets, the currency overlay portfolios should be revalued to ensure consistency.

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Free CFA-Level-I Exam Braindumps (page: 67)

QUESTION: 265

Explanation:

QUESTION: 266

Explanation:

QUESTION: 267

Explanation:

QUESTION: 268

Explanation: