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

Free Test Prep CFA® LEVEL 1 Real Questions (page: 85)

Performance Presentation Standards require that income and capital appreciation be presented in addition to total return when dealing with ________.

  1. anti-linear appreciation
  2. real estate
  3. none of these answers
  4. long-term liabilities

Answer(s): B

Explanation:

For real estate, PPS require that income and capital appreciation be presented in addition to total return.



A supervisor complies with Standard III (E) by establishing and enforcing ________ to prevent violations.

  1. legal requirements
  2. fiduciary duties
  3. none of these answers
  4. code of ethics
  5. compliance procedures

Answer(s): E

Explanation:

A supervisor complies with Standard III (E) by identifying situations in which legal violations or violations of the Code and Standards are likely to occur and establishing and enforcing compliance procedures to prevent such violations.



Which of the following are characteristics of material nonpublic information?

  1. The information may be considered relevant by reasonable investors.
  2. The information would have a substantial impact on the market if released.
  3. All of these answers.
  4. The information has not been generally disclosed.

Answer(s): C

Explanation:

Information is "material" if its disclosure would be likely to have an impact on the price of a security or if reasonable investors would want to know the information before making an investment decision. In other words, information is material if it would significantly alter the total mix of information currently available regarding a security. Information is "nonpublic" until it has been disseminated to the marketplace in general and investors have had an opportunity to react to the information.



According to the AIMR-Performance Presentation Standards, ________ must be used when calculating investment performance.

  1. benchmark
  2. asset-weighted return
  3. aggregate return
  4. total return

Answer(s): D

Explanation:

Total return, including realized and unrealized gains plus income, must be used when calculating investment performance. Portfolios must not be switched from one composite to another unlessdocumented changes in client guidelines make switching appropriate. This is a requirement for calculation of returns.



Standard V (B) deals with

  1. independence and objectivity.
  2. performance presentation.
  3. preservation of confidentiality.
  4. insider information.
  5. fair dealing.
  6. research report.

Answer(s): B

Explanation:

The purpose of Standard V (B) is to state the responsibility of AIMR members to avoid misrepresentation of the investment performance and encourages full disclosure of investment performance data to clients and client prospects.



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