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LOS a: Explain and justify a fiduciary’s responsibilities in monitoring an investment portfolio.
Q1. Which of the following choices best describes the reason(s) why a fiduciary must monitor a portfolio?
I. The risk tolerance of the investor may change over time.
II. Economic conditions are likely to change over time.
III. The investor’s liquidity requirements may change over time.
IV. The client portfolio may need to respond to legal or regulatory changes.
A) I only.
B) II only.
C) I, II, III, and IV.
Q2. Darrell Woolaver is the founding principal for Woolaver Capital Management. In his marketing materials, Woolaver makes it a point to tell clients the two primary responsibilities he has as a fiduciary when it comes to portfolio management.
Responsibility 1: Construct each client’s portfolio so that it offers the maximum return per unit of risk.
Responsibility 2: Regularly monitor the investor’s portfolio to make sure it continues to meet the client’s needs.
With respect to his statements about the responsibilities Woolaver has as a fiduciary when it comes to portfolio management, Woolaver is:
A) incorrect with respect to Responsibility 1, and incorrect with respect to Responsibility 2.
B) correct with respect to Responsibility 1, and correct with respect to Responsibility 2.
C) incorrect with respect to Responsibility 1, but correct with respect to Responsibility 2.
Q3. Heidi Burke was recently hired by Beekley Capital Advisors as a portfolio manager. On her first day on the job, Cynthia Beekley, owner and founder of the firm, asks Burke to write down the fiduciary responsibilities of a portfolio manager as they pertain to monitoring a client’s portfolio. Burke writes down the following items and hands the paper to Beekley.
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Item 1: |
Watch for changes in client objectives that may necessitate changes to the portfolio. |
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Item 2: |
Construct the investor’s portfolio to meet the needs of the client as specified in the IPS. |
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Item 3: |
Identify changes in capital market conditions and asset class risks. |
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Item 4: |
Look for changes in client constraints that could cause changes in the client’s allocation. |
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Item 5: |
Avoid trying to make tactical timing changes to a client portfolio because evidence shows that market timing increases risk without increasing return. |
Which of the following most accurately describes Burke’s statements?
A) Only Items 1, 3, and 4 address Beekley’s question, while Item 2 is a fiduciary duty not related to monitoring.
B) Only Items 1 and 4 address Beekley’s question, while Items 2 and 5 are a fiduciary duties not related to monitoring.
C) Only Item 3 addresses Beekley’s question, while Items 1 and 4 would be part of a client’s investment policy statement. | 
发表于 2009-4-10 12:49
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