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Free CFA-Level-I Exam Braindumps (page: 48)

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Arditti manages the pension plan for a publicly traded firm, Eros Computers and in this capacity, has the right to vote 0.5% of the common shares outstanding. Recently, Eros wanted to expand its production operations into Latin America and the board had decided to put the matter for open vote from shareholders. Arditti was on vacation in Fiji at the time and when she was informed about the vote, instructed that the portfolio proxy votes be voted along the same lines as that favored by the senior management. Arditti herself has not studied the merits of the proposed expansion plan but has complete faith in the senior management of Eros, which has always proven to be conscientious and prudent. Arditti has

  1. violated Standard IV (B.1) - Fiduciary Duties by voting the proxy shares in an indiscriminate manner.
    II. can be held liable for failing in her duties under ERIS
    III. violated Standard II (B) - Professional Misconduct by behaving in an unprofessional manner.
  2. I and II
  3. I, II and III
  4. I only
  5. II and III only

Answer(s): A

Explanation:

Corporate pension plan managers are governed by ERISA (Employee Retirement Security Act, 1974). One of the fiduciary duties expected under these guidelines is the voting of proxy shares. A fiduciary who fails to vote the proxy votes, votes them without analysis, or votes them blindly with the management on non-routine decisions will be in violation of ERISA. They can be held liable for trust violation unless there are explicit provisions in the plan which preclude the manager from voting. Note, however, that Arditti's voting does not constitute professional misconduct. Standard II (B) - Professional Misconduct - and Standard IV (B.1) - Fiduciary Duties.



Which of the following is true regarding Standard II (A)?

  1. You must be registered for the next CFA exam in order to call yourself a candidate.
  2. All of these answers.
  3. Candidates may state that they have completed Level I, II, or III.
  4. There is no designation for someone who has passed Level I, II, or III.
  5. This standard relates to oral statements.
  6. This standard relates to business cards and letterheads.

Answer(s): B

Explanation:

Standard II (A) relates to the responsibility of AIMR members and candidates to use their professional designation properly and in a non-misleading manner. A person must be registered to take the next scheduled CFA exam to be a "candidate" in the CFA program. There is no designation for someone who has passed Level I, II, or III of the CFA exam. Candidates may state, however, that they have completed Level I, II, or III.
The standard applies to all related explanations or descriptions of the CFA designation, including letterheads and business cards, resumes, directory listings, printed advertising, brochures and oral statements to clients and prospects.



Which of the following statements is correct regarding Standard II (A) - Use of Professional Designation?

  1. Joe Martin passed Level I and Level II of the CFA exams and is scheduled for the next Level III exam. He may write "Joe Martin, CFA II."
  2. Joe Martin passed Level I and Level II of the CFA exams and is scheduled for the next Level III exam. He may write "Joe Martin, CFA III."
  3. Joe Martin passed Level I and Level II of the CFA exams, but is not scheduled for the next Level III exam.
    He may state, "I am a CFA candidate."
  4. None of these statements are correct.

Answer(s): D

Explanation:

"Joe Martin, CFA II" and "Joe Martin, CFA III" are misrepresentations and a violation of Standard II (A). There is no designation for someone who has passed Level I, Level II, or Level III. He may not state he is a candidate unless he is registered for the next exam.



Composite ________ measures represent the consistency of a firm's composite performance results with respect to the individual portfolio returns within a composite.

  1. disclosure
  2. fee
  3. dispersion
  4. deviation
  5. error

Answer(s): C

Explanation:

The AIMR-PPS require that managers disclose the dispersion of portfolio returns within each composite.






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