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发表于 2011-8-6 16:30
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Question 1
James Cox, CFA, is employed by a London investment banking firm. Firm policy states that employees must pay for their own meals and entertainment if they go out socially with vendors or prospective vendors of the company. Thomas Wheelwright, a representative of a major securities information service, invites Cox out for a dinner. Wheelwright insists on paying for the evening. If Cox allows Wheelwright to pay for the dinner, Cox has violated:
A) company policy but not the Code and Standards.
B) both company policy and the Code and Standards.
C) company policy but not the Code and Standards as long as the firm receives full disclosure of Cox's potential conflict of interest.
D) neither company policy nor the Code and Standards because the social engagement was not directly related to company business.
The correct answer was B) both company policy and the Code and Standards.
While accepting a simple dinner is likely not a violation of the Standards, Standard IV(A) Duties to Employers - Loyalty requires that firm policies be followed. Thus Cox would violate both company policy, designed to minimize potential conflicts involving employees and vendors, and the Standards.
This question tested from Session 1, Reading 2-I, LOS B.
Question 2
Sandra Fellows, CFA, received a telephone call from one of her clients at Boston Financial offering her the free use of the client's vacation home on Cape Cod the following summer. The client stated that the offer was given in appreciation for their many years of working together. To be in compliance with the Code and Standards, Fellows:
A) may accept the offer only if her supervisor is informed and gives consent.
B) may accept the offer without disclosure because the benefit is not contingent upon performance.
C) must decline the offer.
D) may accept the offer but must inform her employer of the gift.
The correct answer was D) may accept the offer but must inform her employer of the gift.
To comply with Standard I(B) Independence and Objectivity and Standard IV(B) Additional Compensation Arrangements, any benefit or compensation a member receives from a client that is in addition to employer-paid compensation or benefits must be disclosed to the member's employer. Since the offer is not contingent on future performance, written permission is not required. (See Example 7 for Standard I(B) in the Standards of Practice Handbook.)
This question tested from Session 1, Reading 2-IV, LOS B.
Question 3
Lunar Investment Management is a subsidiary of a larger company, Galaxy Financial. Lunar’s CEO, Travis Howry, would like to have Lunar present GIPS-compliant performance data and has taken the steps necessary to ensure that Lunar's performance presentation is compliant. He asks Galaxy’s President, Don Wiggins, about Galaxy’s interest in presenting GIPS-compliant performance data. Wiggins informs Howry that Galaxy is not interested. Lunar may:
A) not claim compliance because compliance must be made on a company-wide basis.
B) claim partial compliance if Lunar's performance presentations are in compliance but disclose that Galaxy's are not and in what ways.
C) claim compliance as long as Lunar is advertised as a distinct business entity, separate from Galaxy.
D) not claim compliance unless Galaxy's ownership of Lunar is less than 50%.
The correct answer was C) claim compliance as long as Lunar is advertised as a distinct business entity, separate from Galaxy.
Lunar can claim compliance as long as it has met the reporting requirements necessary and is held out to clients (advertised) as a distinct business entity. Partial compliance is not allowed. Ownership percentage is not an issue here.
This question tested from Session 1, Reading 4, LOS b
Question 4
Sally Fiedler, CFA, is a portfolio manager for Asipre Investments, Inc. In her spare time Fiedler intends to manage the small endowment fund for her children’s private day school. She believes it will only take a couple of hours each weekend and she will receive a discount on tuition for her two children. According to Standard IV(B) – Additional Compensation Arrangements, Fiedler:
A) must inform her employer of the arrangement but need not get permission as the time commitment is small.
B) must inform her employer and get permission, either verbal or written.
C) must inform her employer of all the details of this arrangement and receive written permission.
D) need not inform her employer because it will be on her own time and there is no actual compensation received.
The correct answer was C) must inform her employer of all the details of this arrangement and receive written permission.
Standard IV(B), Additional Compensation Arrangements requires that employees who perform independent practice for compensation (of any type) must inform their employer of all the details, including compensation and the duration of the agreement, and receive written permission from their employer before proceeding.
This question tested from Session 1, Reading 2-IV, LOS A.
Question 5
Ralph Reed, CFA, is a portfolio manager at Parker Management, a U.S. equities manager. When clients inquire about fixed income portfolio management, Reed refers them to Ann Foster, who refers clients seeking U.S. equities management to Reed. For clients with an interest in international equities, Reed refers them to Global Advisors and receives $1,000 for each referral that opens an account with them. Which of the following best describes the action Reed must take regarding clients he refers to Parker or to Global?
A) If a referred client opens an account with Parker or with Global, Reed must disclose the arrangement with Parker or amount of the referral fee he receives from Global.
B) At the time he makes a referral to one of these advisors, Reed must disclose the amount of the referral fee from Global, but not the arrangement with Parker.
C) At the time he makes the referral, Reed must disclose the arrangement with Parker, the arrangement with Global, and the amount of the referral fee he receives from Global.
D) At the time he makes a referral, Reed must disclose that he will receive a referral fee from Global, but not the amount or the arrangement with Parker.
The correct answer was C) At the time he makes the referral, Reed must disclose the arrangement with Parker, the arrangement with Global, and the amount of the referral fee he receives from Global.
Standard VI(C) – Referral Fees requires that members who expect to receive anything of value from making a referral disclose that fact and the amount and nature (one-time payment, ongoing fee) of any referral fee so that clients can make their own determination of how the referral arrangement may affect the member’s objectivity.
This question tested from Session 1, Reading 2-VI, LOS C. |
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