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

Free Test Prep CFA-Level-I Real Questions (page: 34)

Arbliss, an AIMR member, has been working for a financial software company, Supersoft Corp. for the past 3 years. He now wants to leave the firm and start his own software proprietorship. Which of the following will not constitute a violation of the AIMR code?

  1. Making arrangements to set up the proprietorship prior to leaving current employment, without Supersoft knowing about it.
    II. Soliciting Supersoft's clients prior to the termination of employment.
    III. Using a confidential software error-checking program he had developed for Supersoft for his own purposes.
  2. I only
  3. III only
  4. II and III only
  5. I and III only

Answer(s): A

Explanation:

Standard III (B) - Duty to Employer - does not preclude a member from entering into independent practice while still employed. It does require the employee to obtain written permission from the employer as well as the outside entity before doing this. It does not prohibit a departing employee from making arrangements to enter independent practice prior to leaving current employment, as long as such preparations do not constitute a breach of loyalty toward the employer. Activities that can be a breach of loyalty include misappropriation of trade secrets, misuse of confidential information, solicitation of the firm's clients before the termination of unemployment and in general, any activity that would destabilize the firm's operations.



Relationships with and Responsibilities to the Investing Public are dealt with under:

  1. Standard V
  2. None of these answers
  3. Standard III
  4. Standard II
  5. Standard IV
  6. Standard I

Answer(s): A

Explanation:

Relationships with and Responsibilities to the Investing Public are dealt with under Standard V.



The ________ states that broker/dealers should be subject to strict standards because they are advertising themselves as market professionals.

  1. cover canon
  2. canopy principle
  3. posting criterion
  4. shingle theory
  5. marketing regulation

Answer(s): D

Explanation:

The shingle theory states that broker/dealers should be subject to strict standards because they are "hanging out their shingles," or, advertising themselves as market professionals. The theory states that inherent in the relationship between brokers/dealers and their clients is the representation that the customer will be dealt with fairly. Brokers/dealers are in a position to exploit their customers' trust and ignorance and therefore they are held to a higher duty of care.



According to the AIMR PPS, composites must include new portfolios at the start of the next performance measurement period, ________, after the portfolio comes under management or according to reasonable and consistently applied firm guidelines.

  1. at least annually
  2. at least semi-annually
  3. at least quarterly
  4. at least monthly

Answer(s): C

Explanation:

Composites must include new portfolios at the start of the next performance measurement period (at least quarterly) after the portfolio comes under management or according to reasonable and consistently applied firm guidelines. This is a requirement for creation and maintenance of composites.



Procedures for compliance with Standard I include ________.

  1. activities relating to interns and people under contract
  2. keep informed
  3. when you suspect illegal activity, determine legality
  4. when you suspect illegal activity, dissociate from that activity
  5. all of these answers
  6. maintain current files
  7. review procedures

Answer(s): E

Explanation:

Members should maintain current reference copies of applicable statutes, rules and regulations in a readily accessible manner. Members should establish a procedure by which employees are kept informed about changes in applicable laws. Members should review procedures on a regular basis to ensure that they reflect current law and provide adequate guidance. When a member suspects illegal activity is being conducted, the member should consult counsel to determine the conduct's legality and dissociate from the conduct if there are reasonable grounds to believe that it is illegal. This applies to the activities of interns or contractors as well.



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