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Free CFA-Level-I Exam Braindumps (page: 57)

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PDF with 3963 Questions

The ________ of portfolio performance over time is a measure of the variability or dispersion of the historical returns around their central tendency or mean return.

  1. variance
  2. standard deviation
  3. mean variance
  4. mode

Answer(s): B

Explanation:

Standard deviation is also a useful measure of the relative volatility of fund categories.



________ accounting is mandatory for fixed-income securities.

  1. Flexible
  2. Risky
  3. Total
  4. Equal
  5. Accrual

Answer(s): E

Explanation:

Accrual accounting must be used for fixed-income securities and all other securities that accrue income.
Accrued income must be included in the market value calculation of the denominator and numerator.



Bronson provides investment advice to the board of trustees of a private university endowment fund. The trustees have provided Bronson with the fund's financial information, including planned expenditures. Bronson receives a phone call on Friday afternoon from Murdock, a prominent alumnus, requesting that Bronson fax him comprehensive financial information about the fund. According to Murdock, he has a potential contributor but needs the information that day to close the deal and cannot contact any of the trustees. Based on AIMR Standards, Bronson should:

  1. send Murdock the information because it is not material nonpublic information.
  2. not send Murdock the information to preserve confidentiality.
  3. send Murdock the information, provided Bronson promptly notifies the trustees.
  4. send Murdock the information because disclosure would benefit the client.

Answer(s): B

Explanation:

This question deals with Standard IV (B.1), Fiduciary Duties and Standard IV (B.5), Preservation of Confidentiality. Bronson owes a fiduciary duty to the fund trustees. He cannot disclose confidential financial information to anyone without the permission of the fund, regardless of whether the disclosure may benefit the fund. The fund must be notified and permission obtained before the information is publicized. Even if the information were nonmaterial, the member cannot disclose it because it is confidential.



Taxes must be recognized

  1. in the same period as when the taxable event occurred.
  2. on a quarterly basis.
  3. in the period immediately following the period in which the taxable event occurred.
  4. on a yearly basis.

Answer(s): A

Explanation:

Taxes must be recognized in the same period as when the taxable event occurred. This is a requirement for calculation of returns.






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