the management of the investment firm. Which of the following statements is TRUE? This is:
A) not permissible since items purchased with soft dollars must provide at least 50% of their benefits to the client.
B) permissible since items purchased with soft dollars must provide a benefit to the firm.
C) not permissible since items purchased with soft dollars must provide a benefit to the client.
Q6. Jason Wariner manages an equity mutual fund and directs trades to various brokers on the basis of their research coverage of the equity being traded. The commissions paid vary somewhat (i.e., he knows that he could occasionally save on the commission by dealing with a broker other than the one handling the transaction) but are believed to be reasonable in relation to the research and execution services provided. With regard to this practice, which of the following statements is TRUE? This action is:
A) permissible; Wariner is not in violation of his fiduciary duties.
B) not permissible; Wariner is in violation of his fiduciary duties.
C) not permissible; Wariner is not in violation of his fiduciary duties.
Q7. Rochelle Bell is the Chief Investment Officer at a money management company that claims it is in compliance with CFA Institute Soft Dollar Standards. Last year the company had $10 million of soft dollar funds accruing from commissions available but only spent $8 million on research services. This year
A) allocate $500,000 of this year's soft dollars to this last group.
B) use the 50-50 rule and allocate $250,000 of soft dollars to this last group.
C) not allocate any of the soft dollars to this last group.
Q8. Springfield Investment Advisors uses soft dollars generated with mutual fund transactions to get software that is only useful for the management of client assets. Which of the following statements is TRUE? This is:
A) not permissible, since items purchased with soft dollars must provide a benefit to the firm.
B) not permissible, since items purchased with soft dollars must be tangible, and software is intangible
C) permissible, since items purchased with soft dollars must provide a benefit to the client.
答案和详解如下:
the management of the investment firm. Which of the following statements is TRUE? This is:
A) not permissible since items purchased with soft dollars must provide at least 50% of their benefits to the client.
B) permissible since items purchased with soft dollars must provide a benefit to the firm.
C) not permissible since items purchased with soft dollars must provide a benefit to the client.
Correct answer is C)
This action is not permissible – items purchased must provide a benefit to the client. The firm is responsible for securing assets necessary for the operation of the firm from the firm’s resources.
Q6. Jason Wariner manages an equity mutual fund and directs trades to various brokers on the basis of their research coverage of the equity being traded. The commissions paid vary somewhat (i.e., he knows that he could occasionally save on the commission by dealing with a broker other than the one handling the transaction) but are believed to be reasonable in relation to the research and execution services provided. With regard to this practice, which of the following statements is TRUE? This action is:
A) permissible; Wariner is not in violation of his fiduciary duties.
B) not permissible; Wariner is in violation of his fiduciary duties.
C) not permissible; Wariner is not in violation of his fiduciary duties.
Correct answer is A)
Since the research is relevant to the client assets and is used for the benefit of the client, the action is permissible, and there is no violation so long as the value of the research obtained is commensurate with the differential in cost paid.
Q7. Rochelle Bell is the Chief Investment Officer at a money management company that claims it is in compliance with CFA Institute Soft Dollar Standards. Last year the company had $10 million of soft dollar funds accruing from commissions available but only spent $8 million on research services. This year
A) allocate $500,000 of this year's soft dollars to this last group.
B) use the 50-50 rule and allocate $250,000 of soft dollars to this last group.
C) not allocate any of the soft dollars to this last group.
Correct answer is C)
In cases when the manager cannot determine whether the expenditure qualifies for soft dollars, soft dollars cannot be used.
Q8. Springfield Investment Advisors uses soft dollars generated with mutual fund transactions to get software that is only useful for the management of client assets. Which of the following statements is TRUE? This is:
A) not permissible, since items purchased with soft dollars must provide a benefit to the firm.
B) not permissible, since items purchased with soft dollars must be tangible, and software is intangible
C) permissible, since items purchased with soft dollars must provide a benefit to the client.
Correct answer is C)
This action is permissible, since the software is relevant and provides a benefit to the client.thanks
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