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Free CFA-Level-I Exam Braindumps (page: 40)

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PDF with 3963 Questions

Standard IV (B.5), Preservation of Confidentiality specifically states that one may not enter into ________ that may prevent a party from cooperating with the Professional Conduct Program (PCP) in its investigation of the member's alleged violations of the Code and Standards.

  1. settlement agreements
  2. confidential conversations
  3. priority dealings
  4. business relationships

Answer(s): A

Explanation:

Under Standard IV (B.5), members are prohibited from executing settlement agreements that may prevent a customer or other party from providing information, documents, or testimony or otherwise cooperating with the PCP in its investigation.



When dealing with a trust, according to the Prudent Man Rule, trustees must:

  1. apply "all reasonable efforts" to the remaindermen.
  2. be impartial between income beneficiaries and remaindermen.
  3. take into account income beneficiaries first, then the remaindermen.
  4. take into account the remaindermen first, then the income beneficiaries.
  5. apply "all reasonable efforts" to the income beneficiaries.

Answer(s): B

Explanation:

Under the Prudent Man Rule, trustees must be impartial between income beneficiaries and remaindermen and must achieve an equitable balance between current income and the preservation of principal in real terms.



Standard IV (A.3) relates to two major components, Independence and Objectivity. Under this Standard, modest gifts that do not exceed ________ and entertainment are acceptable, without disclosure.

  1. $100
  2. one-twentieth of your annual salary and bonus
  3. one-tenth of your annual salary and bonus
  4. $500
  5. none of these answers
  6. $1,000

Answer(s): A

Explanation:

External sources may try to influence the investment process by offering analysts and portfolio managers a variety of "perks." The perks may include gifts, invitations to lavish functions, tickets and so on. Modest gifts that do not exceed $100 and entertainment are acceptable, but special care should be taken by member analysts and investment managers to resist subtle and not-so-subtle pressures to act in a manner possibly detrimental to their clients.



Jay Simpson was recently convicted of a felony in the state of California. Jay is a resident of Arizona, where he conducts all his business. The felony conviction resulted from activities not related to his primary business. With regard to standard II.B-Professional Misconduct, Jay has:

  1. violated the standard since felony convictions are considered professional misconduct.
  2. not violated the standard since the conviction occurred in a non-resident state.
  3. not violated the standard since AIMR does not impose sanctions for felony convictions.
  4. not violated the standard since the conviction is for non-business activities.
  5. none of these answers.

Answer(s): A

Explanation:

Standard II (B) is violated if convictions for felony or similar offenses occur, regardless of whether the offenses were related to the member's professional activities or not.






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