QUESTION: 289

ERISA fiduciaries must adhere to the following prudent procedures:
- establish a written investment policy for the plan - diversify plan assets
- make investment decisions with the skill and care of a prudent expert
- monitor investment performance
- control investment expenses
- avoid ________ transactions

insider
diversification
prohibited
none of these answers
commitment

Answer(s): C

Explanation:

These procedures are stipulated under the detailing of ERISA fiduciary duties, to ensure that fiduciary complies with the duty to act with prudence. Although the ERISA fiduciary duty allows for a fairly broad range of investments, it does prohibit certain transactions. An ERISA fiduciary can never: - deal with plan assets in his or her own interest or for his or her own account (self-dealing); - act in a transaction involving the plan on behalf of a party with interest adverse to the plan (conflict of interest); - receive any compensation for his or her own personal account from any party dealing with the plan in connection with a transaction involving plan assets (kickbacks).

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QUESTION: 290

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

exchange rates
settlements
trades
taxes
disclosures

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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QUESTION: 291

Sanctions that AIMR may impose on its members include:

Revocation of the member's registration as an investment advisor.
II. Private censure.
III. A monetary fine.
IV. Suspension of membership.
II and IV only.
I and III only.
II, III and IV only.
I, II, III and IV.

Answer(s): A

Explanation:

The question deals with the disciplinary sanctions available to AIMR's PCP. The PCP can suspend membership or impose a private censure on members for violating the Code and Standards. However, AIMR has no authority to revoke a member's registration as an investment advisor, or to impose a monetary fine.

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QUESTION: 292

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

risk tolerance
none of these answers
type and nature of clients
expected cash flows
investable funds

Answer(s): C

Explanation:

"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."

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Free CFA-Level-I Exam Braindumps (page: 73)

QUESTION: 289

Explanation:

QUESTION: 290

Explanation:

QUESTION: 291

Explanation:

QUESTION: 292

Explanation: