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Free CFA-Level-I Exam Braindumps (page: 63)

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According to the AIMR-PPS, performance results of a past firm or affiliation

  1. must always be linked to the historical records of the new firm to show a fair and true representation of results.
  2. none of these answers.
  3. may or may not be linked to the historical records of new firm or affiliation, it is left to the discretion of the investment manager and that information should be disclosed.
  4. must not be used to represent the historical record of a new affiliation or a new firm identity.

Answer(s): D

Explanation:

Performance results of a past firm or affiliation must not be used to represent the historical record of a new affiliation or a new firm entity. This is a requirement for presentation of results.



Various countries' securities laws permit a manager to pay up for goods and services without violating the manager's fiduciary duty, so long as the requirements of the law are followed. Each of the following are typical requirements, except:

  1. the manager's soft-dollar practice should be always maintained confidentially in his or her files.
  2. at all times, the manager must seek best price and execution.
  3. the commission paid must be reasonable in relation to the research and execution services received.
  4. the goods or services purchased must be for "research service."
  5. none of these answers.

Answer(s): A

Explanation:

The soft-dollar practice must be disclosed.



According to the AIMR-PPS, all actual fee-paying discretionary portfolios must be included in at least one composite defined according to

  1. managerial style of investment portfolio.
  2. similar strategy or investment objective.
  3. size of investment portfolio.
  4. date of portfolio inception.

Answer(s): B

Explanation:

All fee-paying discretionary portfolios must be included in at least one composite defined according to similar strategy or investment objective. This is a requirement for creation and maintenance of composites.



According to Standard IV (B.4), Priority of Transactions, a member is a "beneficial owner" if the member has each of the following, EXCEPT:

  1. the power to vote or direct the voting of the shares of the securities or investments.
  2. the power to dispose or direct the disposition of the security or investment.
  3. the authority to supervise reasonably and adequately the actions of those accountable to him.
  4. a direct or indirect pecuniary interest in the securities.

Answer(s): C

Explanation:

The authority to supervise those below the member has no relation to the concept of "beneficial owner." Also, supervisory responsibility is covered under Standard III (E).






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