Q17. A broker was sanctioned for unsuitable recommendations and excessive trading involving three accounts under his care. These clients were unsophisticated, inexperienced individual investors with limited means.

In this situation, all of the following would be components of an effective compliance process EXCEPT:

A)   diversifying portfolios where appropriate.

B)   educating clients in the basics of investment characteristics.

C)   using margin accounts.

Q18. In this situation, which of the following would NOT be a component of an effective compliance process?

A)   Educate clients on how to select investments because this can help clients accomplish their investment policy statement goals.

B)   Examine risk tolerance carefully because risk tolerance is an important element in determining an appropriate investment policy statement.

C)   Use concentrated portfolios consisting of only a few assets because this approach reduces trading costs.

Q19. Stephen Rangen, a former broker, had three accounts consisting of unsophisticated, inexperienced individual investors with limited means. One of these accounts was an elderly couple. The clients wanted to invest in safe, income-producing investments. They relied heavily on Rangen’s advice and expected him to initiate most transactions in their respective accounts. In managing their accounts, Rangen pursued the following strategies: (1) bought U.S. treasury strips and non-dividend paying over-the-counter stocks, (2) used margin accounts, and (3) concentrated the equity portion of their portfolios in one or two stocks. Rangen’s approach led to extremely high turnover rates in all three accounts. The Securities and Exchange Commission sanctioned Rangen for unsuitable recommendations and excessive trading in several accounts.

For this specific situation, which of the following is least likely to be an appropriate compliance procedure involving Standard III(C), Suitability? The broker should:

A)   avoid using material nonpublic information received in confidence to benefit clients.

B)   develop an investment policy statement for each client.

C)   assess and document each client's risk tolerance.

Q20. For this specific situation, all of the following are appropriate compliance procedures involving Standard III(C), Suitability, EXCEPT:

A)   complying with any prohibitions on activities imposed by their employer if a conflict of interest exists.

B)   reviewing investment policy statements regularly.

C)   educating clients about selecting appropriate asset allocations and strategies.

[此贴子已经被作者于2009-1-9 15:55:44编辑过]

答案和详解如下：

Q17. A broker was sanctioned for unsuitable recommendations and excessive trading involving three accounts under his care. These clients were unsophisticated, inexperienced individual investors with limited means.

In this situation, all of the following would be components of an effective compliance process EXCEPT:

A)   diversifying portfolios where appropriate.

B)   educating clients in the basics of investment characteristics.

C)   using margin accounts.

Correct answer is C)

Using margin accounts would be inappropriate in this situation because it would increase the risk of loss and require clients to pay interest on the margin loan, adding to the cost to maintain the account. Trading on margin is inappropriate for unsophisticated, inexperienced individual investors with limited means.

Q18. In this situation, which of the following would NOT be a component of an effective compliance process?

A)   Educate clients on how to select investments because this can help clients accomplish their investment policy statement goals.

B)   Examine risk tolerance carefully because risk tolerance is an important element in determining an appropriate investment policy statement.

C)   Use concentrated portfolios consisting of only a few assets because this approach reduces trading costs.

Correct answer is C)

In this case, the broker increased the risk of loss for the clients beyond that consistent with the client objectives by concentrating much of their equity in particular securities. A component of an effective compliance process would be to develop diversified portfolios to reduce portfolio risk.

Q19. Stephen Rangen, a former broker, had three accounts consisting of unsophisticated, inexperienced individual investors with limited means. One of these accounts was an elderly couple. The clients wanted to invest in safe, income-producing investments. They relied heavily on Rangen’s advice and expected him to initiate most transactions in their respective accounts. In managing their accounts, Rangen pursued the following strategies: (1) bought U.S. treasury strips and non-dividend paying over-the-counter stocks, (2) used margin accounts, and (3) concentrated the equity portion of their portfolios in one or two stocks. Rangen’s approach led to extremely high turnover rates in all three accounts. The Securities and Exchange Commission sanctioned Rangen for unsuitable recommendations and excessive trading in several accounts.

For this specific situation, which of the following is least likely to be an appropriate compliance procedure involving Standard III(C), Suitability? The broker should:

A)   avoid using material nonpublic information received in confidence to benefit clients.

B)   develop an investment policy statement for each client.

C)   assess and document each client's risk tolerance.

Correct answer is A)

The prohibition against use of material nonpublic information refers to Standard II(A), not Standard III(C), Suitability.

Q20. For this specific situation, all of the following are appropriate compliance procedures involving Standard III(C), Suitability, EXCEPT:

A)   complying with any prohibitions on activities imposed by their employer if a conflict of interest exists.

B)   reviewing investment policy statements regularly.

C)   educating clients about selecting appropriate asset allocations and strategies.

Correct answer is A)

Standard VI(A), Disclosure of Conflicts, refers to complying with any prohibitions on activities imposed by their employer if a conflict of interest exists and, therefore, is unrelated to Standard III(C).

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