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

Free Test Prep CFA® LEVEL 1 Real Questions (page: 59)

Sanctions that AIMR may impose on its members include:

  1. Revocation of the member's registration as an investment advisor.
    II. Private censure.
    III. A monetary fine.
    IV. Suspension of membership.
  2. II and IV only.
  3. I and III only.
  4. II, III and IV only.
  5. I, II, III and IV.

Answer(s): A

Explanation:

The question deals with the disciplinary sanctions available to AIMR's PCP. The PCP can suspend membership or impose a private censure on members for violating the Code and Standards. However, AIMR has no authority to revoke a member's registration as an investment advisor, or to impose a monetary fine.



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

  1. risk tolerance
  2. none of these answers
  3. type and nature of clients
  4. expected cash flows
  5. investable funds

Answer(s): C

Explanation:

"Client identification" requires that the type and nature of clients be considered. Risk tolerance is considered under "investor objectives." Investable funds and expected cash flows are considered under "investor constraints."



Standard IV (B.1) clearly states that ________ owe undivided loyalty to their clients and must place client interests before their own.

  1. AIMR members
  2. supervisors
  3. none of these answers
  4. fiduciaries
  5. analysts

Answer(s): D

Explanation:

Standard IV (B.1) - Fiduciary Duties states that "In relationships with clients, members shall use particular care in determining fiduciary duty and must act for the benefit of their clients and place their clients' interests before their own." "Fiduciaries" is the best answer.



The primary beneficiaries of the AIMR-PPS are:

  1. current & prospective clients.
  2. AIMR members.
  3. all investment professionals.
  4. investment firms who adopt the standards.

Answer(s): A

Explanation:

Since the PPS strive to achieve greater uniformity and compatibility amongst the various performance presentations, clients who wish to compare investment results across various firms benefit the most. Note, however, the mere compliance of a firm with the PPS does not mean that clients should not perform due diligence before making investment decisions.



NL is a country with no securities laws. LS is a country that has securities laws that are less strict than the AIMR code of ethics while MS has securities laws that are stricter than the code of ethics. A securities trader lives in MS but conducts his business in LS. His behavior is governed by MS laws. However, the MS law states that the applicable business laws are the local laws where the business is conducted. In that case, the trader must adhere to:

  1. LS business laws.
  2. AIMR code.
  3. MS business laws.
  4. a combination of MS and LS business law.

Answer(s): B

Explanation:

An AIMR member must always adhere to the code of ethics, unless the laws governing his/her behavior are stricter, in which case, the stricter laws must be followed. In this case, since the LS law applies to the trader's business behavior, the trader must follow the stricter AIMR code of conduct.



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