Reading 2-III: Standards of Professional Conduct & Gui likely, required, following, black

mayanfang1

Q1. Which of the following is least likely required of fiduciaries who are responsible for pension plans?

A)   Judging investments in the context of the total portfolio.

B)   Supporting the sponsor's management during proxy fights.

C)   Acting solely in the interest of plan participants.

Q2. Tony Calaveccio, CFA, is the manager of the TrustCo Small Cap Venture Fund in Toronto. He places trades for the fund with Canadian Brokerage. Canadian provides Calaveccio with soft dollars to purchase research. He uses these soft dollars to get research reports from Canadian's research department regarding the issues currently held in the small cap portfolio, and also for firms he is contemplating adding to the portfolio. By using soft dollars in this manner, Calaveccio has:

A)   violated the Code and Standards by acquiring research on currently held issues and by acquiring research on issues contemplated for purchase.

B)   violated the Code and Standards by acquiring research on issues contemplated for purchase but not by acquiring research on currently held issues.

C)   not violated the Code and Standards.

Q3. Tony Calaveccio, CFA, is the manager of the TrustCo Small Cap Venture Fund in Toronto. Calaveccio places a trade with Quantco Brokerage. While Calaveccio's part of the transaction was conveyed correctly to Quantco, there was a trading error made in Calaveccio's account due to a slip up within Quantco. Calaveccio realizes that the error has taken place, and informs his contact at Quantco. Calaveccio allows Quantco to cover the error, with no cost to TrustCo. This is:

A)   a violation of Calaveccio's duty to his employer.

B)   a violation of Calaveccio's fiduciary duties.

C)   permissible under CFA Institute Standards since some trading errors are a fact of life in the securities industry.

Q4. While trading on behalf of a pension account, an analyst receives special research reports from the brokerage firm with whom she is doing the trades. Such an activity is:

A)   a violation of only The Code of Ethics.

B)   a violation of both Standard III(A), Loyalty, Prudence, and Care, and the Code of Ethics.

C)   not in itself a violation of Standard III(A), Loyalty, Prudence, and Care, nor the Code of Ethics.

 

Q5. Tony Calaveccio, CFA, is the manager of the TrustCo Small Cap Venture Fund in Toronto. He places trades for the fund with River City Brokerage. River
    City provides Calaveccio with soft dollars to purchase research. River
    City also deals in municipal bonds, some of which Calaveccio holds in his personal portfolio. He periodically uses the soft dollars to request research reports on various small cap stocks and also on the status of the municipal bond market and issues that he holds. These actions are:

A)   not in violation of the Code and Standards.

B)   in violation of his fiduciary duties regarding both the small cap research and the municipal bond research.

C)   in violation of his fiduciary duties regarding the municipal bond research but not so regarding the research on the small cap issues.

[此贴子已经被作者于2009-1-9 15:48:33编辑过]

mayanfang1

答案和详解如下：

Q1. Correct answer is B)

Under Standard III(A) Loyalty, Prudence, and Care, fiduciaries must evaluate management’s proposals during proxy fights to see if they are in the best interest of the plan participants. If management’s ideas are justifiable and reasonably ensure plan participants’ betterment, then fiduciaries can support them. If management is only trying to further its own objectives, especially at the cost of plan participants, then fiduciaries must vote against management in proxy fights.

Q2. Correct answer is C)

The issue at hand is the member's fiduciary responsibilities in handling "soft dollars" which are the property of the client (in this case the holders of the shares of the Small Cap Venture Fund). Standard III(A) Loyalty, Prudence, and Care delineates the member's responsibilities. Since he is clearly using the soft dollars to obtain research that is directly applicable to his professional duties, there is no violation of the Standard.

Q3. Correct answer is C)

The issue is similar to an allocation of soft dollars. Clearly, if the broker absorbs the loss, they expect to make up the difference in some way. However, since the error was on the part of Quantco Brokerage, Calaveccio is under no obligation to cover the cost of the trading error. Moreover, no reasonable observer expects that there exists any implied future allocation of trades to Quantco in return for correcting their own mistake. There is no violation of Standard III(A), Loyalty, Prudence, and Care.

Q4. Correct answer is C)

An analyst can receive research from a brokerage firm with whom she is trading on behalf of a client. The analyst should inform the client of the arrangement. The client is more likely to violate Standard III(A) by obtaining non-research services or, worse yet, personal benefits from the brokerage firm.

Q5. Correct answer is C)

The issue at hand is the member's fiduciary responsibilities in handling "soft dollars" which are technically the property of the client. Standard III(A), Loyalty, Prudence, and Care, delineates the member's fiduciary responsibilities with regards to soft dollars. Since municipal bond research is clearly not relevant to the Small Cap Fund holders, he is clearly using the soft dollars to obtain research for his personal benefit and is in violation of the Standard.

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