Carmina Aburana is a sales assistant to Drew Door, a sales manager at Hicost Brokerage. Hicost has a policy of requiring at least 20% margin on stocks that are deemed illiquid or extremely risky. For these purposes, it creates and updates a list of such stocks on a weekly basis. Yoddly Yoo, Inc. is an up and coming internet firm whose stock has been on this list for some time now. One of Carmina's "blue chip" clients, Amadeus, has been speculating on Yoddly's stock for the past two weeks, repeatedly going in and out of the market. In this process, he has unfortunately generated significant losses and his margin on the account has fallen to 12%. To make up for the shortfall, Amadeus calls up Carmina and requests a "borrowing on the account" of 10% for the next 2 weeks, promising to pay a hefty interest rate of 38%on an annualized basis. Since Amadeus has never been in default, Carmina agrees to the arrangement and moves some funds from another client's account. There is no explicit rule at Hicost that prohibits such an arrangement, though it is clearly an oversight on part of the Compliance department. Drew notices this transaction and calls Carmina for an explanation. On hearing the explanation, he tells Carmina that such arrangements are in violation of the company rules and should not be repeated. After 2 weeks, Amadeus supplies the necessary margin for his account.
Answer(s): B
Carmina has shown poor judgment in not recognizing the spirit behind Hicost's 20% margin requirement.However, in the absence of any explicit rule in this about fund transfers, she can make a case that she is not in violation of any laws or code of conduct. Drew, on the other hand, has been negligent in his duties. If he understands the import of the margin rule, then he must take steps to unwind the effects of the infraction as soon as possible. In this case, he should have directed Carmina to terminate the arrangement with Amadeus and require that the requisite margin be posted immediately. Further, verbal admonitions are not enough to satisfy supervisory duties when handling a supposed violation of rules. Drew must determine how best to prevent such occurrences in the future and also discuss with the Compliance Department the need for revising the employee rules handbook.
Susan Jackson, with HRS Investments, is appearing in court as an expert witness. She will have to use research done at HRS, to which she did not contribute directly, during her testimony. Which of the following is true, in relation to Jackson's need to comply with Standard II (C)?
Answer(s): C
Expert witnesses represent themselves, not organizations. Thus, Susan must attribute any of HRS's research to HRS and the team that conducted the research.
Which of the following AIMR Standards states that additional compensation agreements must be disclosed to the employer?
Standard III (D) - Disclosure of Additional Compensation Arrangements states: "Members shall disclose to their employer in writing all monetary compensation or other benefits that they receive for their services that are in addition to compensation or benefits conferred by a member's employer."
When an analyst reaches conclusions about a firm's impending announcements before the actual release of information, using non-material, non-public information in conjunction with public information, insider trading charges cannot be leveled against her. This arises from a legal defense against insider trading charges knownas:
Answer(s): D
Insider trading charges arise only when the inside information used is material and non-public. Analysts who use non-material inside information in conjunction with publicly available data to draw conclusions which happen to be the same as those that would be derived given material inside information are shielded from insider trading charges under the "Mosaic Theory." The logic behind the defense is that investment analysts are exposed to a wide variety of public information (i.e., a "mosaic of information") and already have a good idea about what the information means. Further, the inside information, when non-material, cannot (by definition) have been the primary shaper of the final conclusions. Hence, the possession of the inside information makes only marginal contribution to the conclusions and as such, should not trigger insider trading violations.
Smith, a research analyst with a brokerage firm, decides to change his recommendation on the common stock of Green company, Inc., from a buy to a sell. He mails this change in investment advice to all the firm's clients on Wednesday. The day after the mailing, a client calls with a buy for 500 shares of Green Company. In this circumstance, Smith should:
Under Standard IV (B.3), investment recommendations must be disseminated to all clients at the same time, so that all clients are treated fairly. The client's request is contrary to Smith's latest recommendation which he has not yet received. Smith must now make sure that the client receives the changed recommendation. If the client still wants to place a buy order for the shares, only then is Smith obligated to comply with the client's directive.
Share your comments for Test Prep CFA-Level-I exam with other users:
good content
so challenging
17 should be d ,for morequery its scale out
nice question
yes.
good mateial
good practice exam
impressivre qustion
questions seem helpful
question 21 answer is alerts
am preparing for exam
good one thanks
only got thru 5 questions, need more to evaluate
q26 should be b
the aaa triad in information security is authentication, accounting and authorisation so the answer should be d 1, 3 and 5.
need to attend this
these are free brain dumps i understand, how can one get free pdf
provide access
good morning
please upload the ncp-mci 6.5 dumps, really need to practice this one. thanks guys
question 16: https://help.salesforce.com/s/articleview?id=sf.care_console_overview.htm&type=5
yes i m prepared exam
my experience was great with this site as i studied for the ms-900 from here and got 900/1000 on the test. my main focus was on the tutorials which were provided and practice questions. thanks!
great course
very good question
question: 93 which statement is true regarding the result? sales contain 6 columns and values contain 7 columns so c is not right answer.
highly recommend just passed my exam.
great practice! thanks
anyone who wrote this exam recently?
kindly share the dump
could you please upload cfe fraud prevention and deterrence questions? it will be very much helpful.
this is really very very helpful for mcd level 1
very helpful!