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

Free Test Prep CFA® LEVEL 1 Real Questions (page: 67)

Parts of the standards that are ________ must be observed.

  1. restraining
  2. mandatory
  3. recommended
  4. suggested
  5. inhibiting

Answer(s): B

Explanation:

Some aspects of the Performance Presentation Standards are mandatory and must be observed, while other aspects are recommended.



Standard III (B) deals with ________.

  1. Use of Professional Designation
  2. Fundamental Responsibilities
  3. Professional Misconduct
  4. Disclosure of Conflicts to Employer
  5. None of these answers
  6. Duty to Employer
  7. Obligation to Inform Employer of Code and Standards
  8. Plagiarism

Answer(s): F

Explanation:

Standard I deals with Fundamental Responsibilities. Standard II (A) deals with Use of Professional Designation.
Standard II (B) deals with Professional Misconduct. Standard II (C) deals with Plagiarism. Standard III (A) deals with the Obligation to Inform Employer of Codes and Standards. Standard III (B) deals with the Duty to Employer. Standard III (C) deals with Disclosure of Conflicts to Employer.



When a manager is responsible for the portfolios of pension plans or trusts, the duty of loyalty is owed to the ________.

  1. entity who hires the manager
  2. corporation
  3. none of these answers
  4. manager's supervisor(s)
  5. stockholders of the firm
  6. board of directors
  7. investing public

Answer(s): C

Explanation:

The first step in fulfilling a fiduciary duty is to determine what the responsibility is and to who it is owed.
Members should take particular care in determining the identity of the "client" to whom the duty of loyalty is owed. In the context of an investment manager managing the portfolios of pension plans or trusts, the client is not the person or entity who hires the manager but, rather, the beneficiaries of the plan or trust. The duty of loyalty is owed to the beneficiaries.



According to the AIMR-PPS, subsectors or carve-outs of larger international composites

  1. may be used to create stand-alone composites only if the subsectors are actually managed as separate entities, they need not have their own cash allocations or currency management.
  2. may be used to create stand-alone composites only if the subsectors are actually managed as separate entities with their own cash allocations and currency management.
  3. may never be included in the composite with the parent company.
  4. may never be used to create stand-alone composites under any circumstances.

Answer(s): B

Explanation:

Subsectors or carve-outs of larger international composites may be used to create stand-alone composites only if the subsectors are actually managed as separate entities with their own cash allocations and currency management. Portfolios must not be switched from one composite to another unless documented changes in client guidelines make switching appropriate. This is a requirement for creation and maintenance of composites.



Rebecca Dustin, a freelance research analyst, is currently working on a research study on the pharmaceutical industry for KLM Brokerage. She has been using KLM's research facilities in this endeavor. There has been no written agreement between Rebecca and KLM about the project, though there was a verbal agreement that KLM would provide reasonable support for the research. In return, KLM would pay for the final report in case she uncovers something worthwhile. Rebecca is now interviewing with Jacob & Associates, another brokerage firm, for a project and is considering submitting a rough draft of her KLM study to them. If she does this without KLM's permission, she would

  1. not be violating the AIMR code, because she is the owner of the study.
  2. be violating Standard III (B) - Duty to Employer - because KLM has property rights over the study.
  3. be violating Standard III (B) - Duty to Employer - because KLM has first rights over the study.
  4. not be violating the AIMR code, since she is not under any written obligation to KLM.

Answer(s): C

Explanation:

Since Rebecca is acting as a freelance analyst under no written contractual agreement with KLM, the study does not belong to KLM. However, the verbal agreement and the support received from KLM make the first right to use the report a KLM property. Hence, Rebecca must allow KLM sufficient time to act upon her study before using it for any other purpose. Without KLM's permission, Rebecca cannot release the report without violating Standard III (B).



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