Prudent Investor (STALLA EXAM 2) generate, principal, different

soverby

SPOILER - STALLA PRACTICE #2
Vignette:
Garner manages an irrevocable trust that has two benificiaries … (blah blah blah)
1) How is the PI rule different than the PM Rule? Garner will…
a) Wrong
b) Diversfy the portfolio
c) Preserving principal as well as income
B is the correct answer. Isn’t C correct, too? (My logic: PM - preserve capital. PI preserve real value of capital. You need to generate income for this.)
2) Under the new PI rule Garner ,ust
a) Wrong
b) Be loyal to the beneficiaries of the trust
c) Use best execution in the context of other services provided by brokers
Correct answer C
What about B?
3,4) Striaght forward
5) Jenny and Steve provide Garner with instructions to invest entirely in covertible prefered stocks … Garner thinks this isn’t a good diea. Garner should
a) Wrong
b) Ignore J + S
c) Invest according to J + S as they are the sole beneficaries of the fund
Correct answer B
Why? Isn’t this inconsistent with all the other ethics rules, too?
THANKS!