Larry Smith, CFA, is the new equity portfolio manager for a socially responsible mutual fund. The investment policy statement stipulates which stocks do not meet the funds definition of socially responsible. Because Smith was new to the fund, he did not personally agree to the stocks that were forbidden. Subsequently, he included a stock into the portfolio that was on the restricted list. Which of the following statements is FALSE?
| A) | Smith is to be held responsible for the investment policy statement even though it was written before he was employed at the fund. |
| | B) | The fund should have a dispute resolution clause included in its investment policy statement. |
| | C) | Smith was responsible for reading and understanding the investment policy statement prior to stock selection. |
| D) | Smith did not violate the investment policy statement. |
|
Answer and Explanation
Smith is in clear violation of the funds investment policy statement. Just because he is new to the fund, does not exempt him from following the statement. Most investment policy statements contain a stated review process that provides direction for dispute resolution.
| 
发表于 2008-9-16 18:25
|