The ________ assumption must be disclosed if results are presented after taxes.
Answer(s): A
To be in compliance with the PPS, a firm's presentation of its investment performance must disclose the tax rate information.
Performance results for a portfolio need to be presented with cash, ________ equivalents, or substitute assets.
Answer(s): C
Returns from cash and cash equivalents held in portfolios must be included in return calculations and the cash and cash equivalents must be included in the portfolio amount (total assets) on which the return is calculated.
According to the AIMR-PPS, plan sponsors, consultants and software vendors
Answer(s): D
Plan sponsors, consultants and software vendors cannot make a claim of compliance unless these entities actually manage the assets for which they are making the claim of compliance. These groups can claim to endorse the Standards and/or require that the investment management firms they employ, from which they solicit information, or to which they sell be in compliance with the Standards.
Sunil Vaskar is an employee of Glamorgan, a reputable investment banking firm. Glamorgan is a major underwriter for an equity issued by a private firm, Raindrop Waterworks. Sunil has accidentally discovered that the preliminary prospectus issued by Raindrop contains material overstatements about the scope of its businesses and future earning potential. Sunil:
Standard I requires that suspected violation of laws be reported to appropriate supervisory people in the firm. It is also advisable to consult the legal department and dissociate oneself from the illegal activity. Sunil has to dissociate himself from the underwriting process involving Raindrop but he does not have to sever connections with his employer, Glamorgan.
Stewart has been hired by Goodner Industries, Inc., to manage its pension fund. Stewart's fiduciary duty is owed to:
Answer(s): B
Under Standard IV (B.1), Fiduciary Duties, members who manage a company's pension funds owe a fiduciary duty to the participants and benefits of the plan, not the management of the company or the company shareholders.
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