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Free CFA-Level-I Exam Braindumps (page: 94)

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Performance Presentation Standards state that subsectors of larger international composites may be used to create stand-alone composites only if the subsectors are managed as ________ entities.

  1. independent
  2. two
  3. unique
  4. separate

Answer(s): D

Explanation:

Subsectors or carve-outs of larger international composites may be used to create stand-alone composites only if the subsectors are managed as separate entities with their own cash allocations and currency management.



Standard III (C) deals with conflicts of interest of a member with ________.

  1. other investment professionals
  2. none of these answers
  3. the client
  4. colleagues at the same firm
  5. the investing public

Answer(s): B

Explanation:

Standard III (C) deals with conflicts of interest in any actions or decisions of a member with the employer.
Remember, all Standards under Standard III deal with the employer.



Standard IV (A.3) relates to two major components and is titled Independence and ________.

  1. Objectivity
  2. None of these answers
  3. Impartiality
  4. Autonomy
  5. Justice

Answer(s): A

Explanation:

Standard IV (A.3) - Independence and Objectivity, states that members shall use reasonable care and judgment to achieve and maintain independence and objectivity in making investment recommendations or taking investment action.



Trisdale is a portfolio manager who has consistently outperformed the market on a risk-adjusted basis for the past 3 years. As an appreciation for his work, one of his clients recently gave him a travel package to Vancouver worth around $5,000. Trisdale informed his supervisor about this gift and then took time off from work to enjoy a vacation in Vancouver. Trisdale has

  1. violated Standard III (D) - Disclosure of Additional Compensation Arrangements.
  2. violated Standard IV (A.3) - Independence and Objectivity.
  3. not violated the AIMR code of ethics.
  4. violated Standard IV (B.3) - Fair Dealing.

Answer(s): C

Explanation:

The AIMR code of ethics does not preclude members from accepting gifts in excess of the modest amount of $100 from clients, as long as they are disclosed to the immediate supervisor. What the code does prohibit is acceptance of gifts in excess of $100 from parties that have a strong motive to influence the judgment of the members (e.g., companies that a member might be researching for investment recommendations). The disclosure of additional compensation arrangements with clients allows the supervisory authorities to monitor the portfolio activity and ensure that the gift-giving client's portfolio is not receiving any undue favorable treatment.






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