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- 2011-7-11
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- 2016-4-15
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An analyst thinks that a major change in the tax law will benefit holders of utility company stocks. She immediately begins calling all her clients and telling them of the upside potential of investing in such assets now. Based upon this information, this is most likely:
A) a violation of Standard V(A), Diligence and Reasonable Basis.
B) a violation of Standard III(C), Suitability.
C) congruent with Standard V(A), Diligence and Reasonable Basis.
Your answer: A was incorrect. The correct answer was B) a violation of Standard III(C), Suitability.
According to Standard III(C), the analyst needs to determine the suitability of an investment for each client. It is doubtful that all her clients are identical in their needs. According to the information, the analyst mentions the upside potential but does not mention the downside risk. Although the information says that she thinks that the change in the tax law will benefit holders of utility company stocks and says nothing of how she arrived at this conclusion, we do not know if she has or has not made her decision on a reasonable basis.
Both standards are violated why emphasize is on suitability. the process starts from the (thinking) and the answer should be diligence and reasonable basis.. isnt it? |
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发表于 2011-7-13 14:01
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