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

Free Test Prep CFA-Level-I Real Questions (page: 53)

________ accounting is suggested for calculating performance.

  1. Trade-date
  2. Performance
  3. Accrual
  4. Longitudinal
  5. Composite

Answer(s): A

Explanation:

Trade-date accounting is recommended when calculating performance, although settlement-date accounting is acceptable if disclosed. Because of the volatility and lengthy settlement periods of some markets, trade-date accounting is strongly recommended for calculating the performance of international portfolios.



Which of the following AIMR Standards states that a financial analyst must consider the suitability of an investment for each client or portfolio before undertaking investment action?

  1. IV (B.2)
  2. III E
  3. none of these answers
  4. III D

Answer(s): A

Explanation:

Standard IV (B.2) - Portfolio Investment Recommendations and Actions states: "Members shall consider the appropriateness and suitability of investment recommendations or actions for each portfolio or client. Members shall not make a recommendation unless they reasonably determine that the recommendation is suitable to the client's financial situation, investment experience and investment objectives."



Performance is the record of the ________.

  1. individual
  2. firm
  3. investment manager
  4. child
  5. person

Answer(s): B

Explanation:

To be in compliance with the PPS, a firm's presentation of performance must comply on a firmwide basis and must consist of 10 years of performance (or records since the date of inception if the firm is younger than 10 years).



John Cochrun is a reputed money manager who is also an AIMR member. John recently discovered that some employees at the firm where he is employed have been engaging in some questionable activity which could very well be construed as insider trading by the SEC. John, however, does not think the activity is egregious enough to be reported to the SEC. In any case, he does not want to be known as "the rat who blew the whistle." By not reporting the criminal activity, John has:

  1. has not violated the AIMR code.
  2. violated the AIMR code, Standard I (B) - Fundamental Responsibilities.
  3. violated the AIMR code, Standard III (C) - Disclosure of Conflicts to the Employer.
  4. violated the AIMR code, Standard III (B) - Duty to the Employer.

Answer(s): A

Explanation:

The AIMR code does not require members to report legal violations to the appropriate authorities, as long as they don't associate themselves with such activities.



Albert and Tye, who recently started their own investment advisory business, have registered to take the Level III CFA examination. Albert's business card reads, "Judy Albert, CFA Candidate." Tye has not put anything about the CFA designation on his business card, but promotional material that he designed for the business describes the CFA requirements and indicates that Tye participates in the CFA Program and completed Levels I and II. According to the Standards:

  1. Albert has violated the Standards but Tye has not.
  2. Neither Albert nor Tye had violated the Standards.
  3. Tye has violated the Standards and Albert has not.
  4. Both Albert and Tye have violated the Standards.

Answer(s): A

Explanation:

The question deals with Standard II (A), Use of Professional Designation. Candidates may not use the designation in any form prior to actually obtaining their charter. Therefore, Albert has violated Standard II (A).
Candidates may communicate that they are participating in the CFA Program, however and may state the levels that they have completed. Therefore, Tye has not violated Standard II (A).



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