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Test Prep CFA-Level-I Exam Questions
CFA® Level I Chartered Financial Analyst (Page 44 )

Updated On: 28-Feb-2026
Page 44 of 793
PDF with 3963 Questions

Convertible and other hybrid securities

  1. are never included in composites with conventional securities.
  2. are managed separately and treatment must be disclosed in performance reporting.
  3. are not assets to which the Standards are applicable.
  4. must be treated consistently across and within composites.

Answer(s): D

Explanation:

Convertible and other hybrid securities must be treated consistently across and within composites. Portfolios must not be switched from one composite to another unless documented changes in client guidelines make switching appropriate. This is a requirement for creation and maintenance of composites.



To claim compliance, firms must meet

  1. all composite, calculation, presentation and disclosure requirements of the AIMR Performance Presentation Standards.
  2. all composite, calculation, presentation and disclosure recommendations of the AIMR Performance Presentation Standards.
  3. all composite, calculation, presentation and disclosure requirements and recommendations of the AIMR Performance Presentation Standards.
  4. all composite, calculation, presentation and disclosure requirements and at least half of the recommendations of the AIMR Performance Presentation Standards.

Answer(s): A

Explanation:

To claim compliance, firms must meet all composite, calculation, presentation and disclosure requirements of the AIMR Performance Presentation Standards. Firms are also strongly encouraged to follow the recommended standards.



Which of the following statements is NOT correct ?

  1. All of these statements are correct.
  2. Standards II through V contain principles guiding the general activities of members.
  3. Members who work in a country where the Code and Standards impose a higher degree of responsibility than local laws and regulations must adhere to the Code and Standards.
  4. Members are not required to report legal violations to the appropriate governmental or regulatory organizations.
  5. Members who work in a country where the Code and Standards impose a lesser degree of responsibility than local laws and regulations must adhere to the local laws and regulations.

Answer(s): B

Explanation:

Standards II through V address specific conduct, while Standard I contains principles guiding the general activities of members. This distinction should be noted.



Which of the following statements is true?

  1. Standard I sets forth minimum standards relating to general activities.
  2. All of these statements are correct.
  3. Members are to be aware of laws and regulations of foreign jurisdictions.
  4. Standards II through V address specific conduct.
  5. Members who work in a country where the Code and Standards impose a lesser degree of responsibility than local laws and regulations must adhere to the local laws and regulations.
  6. Members are to comply with the laws and regulations of foreign jurisdictions.

Answer(s): B

Explanation:

All the statements are true. Standard I contains principles that apply to the general activities of members while Standards II-V address specific conduct. In addition to complying with the requirements of the Code and Standards, members must be aware of laws and regulations of foreign jurisdictions. When the Code and Standards impose a higher degree of responsibility than applicable securities laws, members must adhere to the Code and Standards and vice-versa.



An employee has a duty of ________ to his current employer, even if he has already disclosed plans to leave within the near future.

  1. loyalty
  2. judgment
  3. none of these answers
  4. sagacity
  5. prudence

Answer(s): A

Explanation:

Standard III (B) states that a departing employee is free to make preparations to go into a competitive business before terminating the relationship with the employee's current employer provided that such preparations do not breach the employee's duty of loyalty.



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