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Free CFA-Level-I Exam Braindumps (page: 20)

Page 19 of 991
PDF with 3963 Questions

A critical part of Standard IV (A.2) is to distinguish between:

  1. research reports and investment memoranda.
  2. insider trading and appropriate trading.
  3. CFA charterholders and non-CFA charterholders.
  4. none of these answers.
  5. employees and independent contractors.
  6. industry and company analysis.
  7. the buy side and the sell side.
  8. facts and opinions.

Answer(s): H

Explanation:

Standard IV (A.2) - Research Reports states the responsibility of AIMR members, CFA charterholders and candidates to include in each research report those key facts that are instrumental to the investment recommendation presented in the report. A critical part of this requirement is to distinguish clearly between opinions and facts.



When a manager is responsible for the portfolios of pension plans or trusts, the duty of loyalty is owed to the ________.

  1. beneficiaries
  2. none of these answers
  3. stockholders of the firm
  4. investing public
  5. entity who hires the manager
  6. corporation
  7. board of directors
  8. manager's supervisor(s)

Answer(s): A

Explanation:

The first step in fulfilling a fiduciary duty is to determine what the responsibility is and to who it is owed.
Members should take particular care in determining the identity of the "client" to whom the duty of loyalty is owed. In the context of an investment manager managing the portfolios of pension plans or trusts, the client is not the person or entity who hires the manager but, rather, the beneficiaries of the plan or trust. The duty of loyalty is owed to the beneficiaries.



Brokers who knowingly or recklessly engage in excessive trading in customers' accounts are known to be ________.

  1. over-selling
  2. mixing
  3. churning
  4. none of these answers
  5. shingling

Answer(s): C

Explanation:

Brokers and dealers are held to a higher standard of care than the average person. They are liable for knowingly or recklessly engaging in excessive trading in customers' accounts, (churning); for accepting funds when they are insolvent, for manipulating the market and for fraud under the shingle theory.



According to the AIMR-PPS, systems incompatibilities

  1. causes distortion of performance presentation and needs to be disclosed.
  2. are one reason for which a firm may not claim compliance for all assets.
  3. cannot be used as a reason for not claiming compliance for all assets.
  4. render a firm unable to claim compliance with the PPS, thus the firm should ensure compatibility.

Answer(s): C

Explanation:

Systems incompatibilities cannot be used as a reason for not claiming compliance for all assets (i.e., a firm cannot make the claim of compliance for only those assets that are measured and monitored on compatible systems).






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