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Free CFA-Level-I Exam Braindumps (page: 98)

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PDF with 3963 Questions

Steffanie Graff is an investment advisor with Wimbledon Advisors, Inc. She recently obtained her CFA charter, reflected on her new business cards. In a meeting, she told a couple of her new clients something to the effect

of the following: "I have a long record of successful investment advises, which have led my client accounts to have an annual return of 32% over the past 3 years. I am sure you will be quite satisfied with my performance." In reality, a large part of this return was caused by a very lucky coincidence wherein one of the penny stocks in a client account registered a 200% increase over a short time due to a takeover. Without this, her client accounts would have averaged less than S&P500 on a risk-adjusted basis. Has Stephanie violated the code of ethics?

  1. Yes, because she has misused her CFA charter to imply superior performance.
  2. Yes, because the statements misrepresent her track record.
  3. Yes, since her presentation of her own performance is in violation of the AIMR-PPP.
  4. No, because the statements are factual and she has not promised any future returns.

Answer(s): B

Explanation:

Standard IV (B.6) - Prohibition against Misrepresentation.



Under Standard III (E) - Responsibilities of Supervisors - which of the following are NOT responsible for maintaining appropriate supervision when they are in a supervisory role?

  1. AIMR members
  2. CFA charterholders
  3. None of these answers
  4. Level I CFA candidates
  5. CFA candidates

Answer(s): C

Explanation:

Standard III (E) states the responsibility of AIMR members, CFA charterholders and candidates for the CFA designation to take steps to prevent persons acting under their supervision from violating the law or the Code and Standards.



Standard ________ states that the financial analyst must use particular care to maintain independence and objectivity in relationships with issuers of securities.

  1. I (B.2)
  2. III (1)
  3. IV (A.3)
  4. II (C.4)
  5. None of these answers

Answer(s): C

Explanation:

Standard IV (A.3) - Independence and Objectivity - ensures that clients have the benefit of work and opinions unaffected by any potential conflict of interest that may adversely affect their judgment. Members should maintain their independence by being wary of "perks" offered by external sources such as corporations, issuers, underwriters and brokers.



Data Droid manages several investment accounts and directs most of the client transactions through Lore's brokerage firm. Lore provides him with excellent, reliable research, though his commissions are higher than industry standards. The research is used to manage all the client accounts. Data has just been approached by the Troy brokerage firm, which is a newcomer in the business. While this firm does not provide any research, it charges commissions that are significantly lower than those charged by Lore. If Data decides to stay with Lore's brokerage firm

  1. has not violated the code since he has a long-standing relationship with Lore.
  2. he has violated the code of ethics, which requires him to keep the expenses to a minimum.
  3. has not violated the code if Lore's research justifies the additional expenses.
  4. has violated the code by violating the Prudent Man Rule.

Answer(s): C

Explanation:

Standard IV (B.1) - Fiduciary Duties






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