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Free CFA-Level-I Exam Braindumps (page: 65)

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The investment community's need for a common, accepted set of guidelines to promote fair representation and full disclosure in every firm's presentation performance results to clients and prospective clients has guided the

development of the

  1. AIMR Standards for Calculation of Returns
  2. AIMR Standards of Practice
  3. AIMR Performance Presentation Standards
  4. AIMR Performance and Calculation Investment Board

Answer(s): C

Explanation:

The Performance Presentation are the manifestation of a set of guiding ethical principles and should be interpreted as minimum standards for presenting investment performance.



When an investment manager's client instructs the manager to use the client's brokerage to purchase goods or services for the client, this is known as:

  1. horizontal brokerage and does not violate any fiduciary duty.
  2. horizontal brokerage and violates the manager's fiduciary duty.
  3. directed brokerage and does not violate any fiduciary duty.
  4. straight brokerage and does not violate any fiduciary duty.
  5. straight brokerage and violates the manager's fiduciary duty.
  6. directed brokerage and violates the manager's fiduciary duty.

Answer(s): C

Explanation:

When an investment manager's client instructs the manager to use the client's brokerage to purchase goods or services for the client, this is known as directed brokerage. Because brokerage is an asset of the client and the brokerage is used to benefit that client, not the manager, such practice does not violate fiduciary duty.



If the use of leverage is ________, the performance presented must include the effects of the leverage.

  1. mandatory
  2. nondiscretionary
  3. discretionary
  4. optional

Answer(s): C

Explanation:

If the use of leverage is nondiscretionary (i.e. mandated by the client), performance must be presented on an all-cash basis.



Under the AIMR Code of Ethics, members shall practice and encourage others to practice in a professional and ethical manner that will reflect credit on members and their ________.

  1. families
  2. employer
  3. public contacts
  4. profession
  5. none of these answers

Answer(s): D

Explanation:

In accordance with the Standards, members will also strive to maintain and improve their competence and the competence of others in the profession.






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