Test Prep CFA® Level I Chartered Financial Analyst CFA® LEVEL 1 Exam Questions in PDF

Free Test Prep CFA® LEVEL 1 Dumps Questions (page: 58)

Access or covered persons are discussed in detail under which of the following standards?

  1. Prohibition against Plagiarism
  2. Responsibilities of Supervisors
  3. None of these answers
  4. Priority of Transactions
  5. Fundamental Responsibilities
  6. Professional Misconduct
  7. Disclosure of Conflicts to Employer
  8. Professional Misconduct

Answer(s): D

Explanation:

Access or covered persons are dealt with under the compliance procedures of Standard IV (B.4), Priority of Transactions.



When formulating an investment policy for a client, which of the following falls under the category "client identification?"

  1. risk tolerance
  2. time horizon
  3. expected cash flows
  4. the existence of separate beneficiaries
  5. none of these answers

Answer(s): D

Explanation:

"Client identification" requires that the existence of separate beneficiaries be considered. Risk tolerance is considered under "investor objectives." Time horizon is considered under "investor constraints."



Hercules Poirot has just received the AIMR letter, informing him that he has passed the Level III exam in the CFA program. He changes his resume to reflect this information. The header now says, "Hercules Poirot, CFA," the "CFA" written in a smaller font. With respect to Standard II (A) - Use of Professional Designation - if Hercules circulates this resume, he will:

  1. have violated Standard II (A). He cannot use the CFA designation till AIMR informs him that he has earned the charter.
  2. have violated Standard II (A). He cannot put the CFA designation on his business card immediately after his name.
  3. have violated Standard II (A). He cannot claim to be a CFA till he obtains the final diploma from AIMR.
  4. not have violated Standard II (A).

Answer(s): A

Explanation:

A candidate earns a CFA charter only after he has passed all 3 exams and has accumulated sufficient professional experience to satisfy the requirements of the program. Till the ICFA Board approves his candidacy, Hercules cannot use the designation, "CFA."



ERISA fiduciaries must adhere to the following prudent procedures:
- establish a written investment policy for the plan - diversify plan assets
- make investment decisions with the skill and care of a prudent expert
- monitor investment performance
- control investment expenses
- avoid ________ transactions

  1. insider
  2. diversification
  3. prohibited
  4. none of these answers
  5. commitment

Answer(s): C

Explanation:

These procedures are stipulated under the detailing of ERISA fiduciary duties, to ensure that fiduciary complies with the duty to act with prudence. Although the ERISA fiduciary duty allows for a fairly broad range of investments, it does prohibit certain transactions. An ERISA fiduciary can never: - deal with plan assets in his or her own interest or for his or her own account (self-dealing); - act in a transaction involving the plan on behalf of a party with interest adverse to the plan (conflict of interest); - receive any compensation for his or her own personal account from any party dealing with the plan in connection with a transaction involving plan assets (kickbacks).



With regard to calculation of returns for international portfolios, a consistent source of ________ should be used.

  1. exchange rates
  2. settlements
  3. trades
  4. taxes
  5. disclosures

Answer(s): A

Explanation:

Whenever the currency overlay manager is notified of changes in the underlying currency exposures as a result of a shift in the underlying assets, the currency overlay portfolios should be revalued to ensure consistency.



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