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Free CFA-Level-I Exam Braindumps (page: 35)

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PDF with 3963 Questions

Level ________ verification applies to the firm.

  1. IV
  2. 0
  3. I
  4. II
  5. III

Answer(s): C

Explanation:

Level I verification applies to all firm composites. Level II verification requires a Level I verification at least on the specific composites being verified at Level II. (Note: There are only two levels of verification.)



When an investment manager uses client brokerage to purchase research services that benefit the investment manager; this is known as ________.

  1. under-the-table agreements
  2. soft dollars
  3. through-research agreements
  4. bartering arrangements
  5. shifting agreements

Answer(s): B

Explanation:

An investment manager often has discretion over the selection of brokers executing transactions. Conflicts arise when an investment manager uses client brokerage to purchase research services that benefit the investment manager, which is commonly called "soft dollars," "soft pounds," or "soft commissions." Whenever a manager uses such client brokerage to purchase services that benefit him, as a fiduciary, he must disclose to clients the methods or policies followed to address the potential conflict.



ERISA fiduciaries must adhere to the following prudent procedures:

- establish a ________ 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 prohibited transactions

  1. supervisory
  2. none of these answers
  3. written
  4. diversified

Answer(s): C

Explanation:

These procedures are stipulated under the detailing of ERISA fiduciary duties, to ensure that the fiduciary complies with the duty to act with prudence.



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

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

Answer(s): G

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.






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