Reading 2-III: Standards of Professional Conduct & Gui 2009, following, include, respect, report

mayanfang1

Q9. With respect to the report on ATX Corporation that Black asked Wood to write, which of the following must Wood include in the report?

A)   Wood does not have the CFA designation and that Black is on the board of ATX.

B)   Black is on the board of ATX and the position of ATX in the trust fund of Wood’s children only.

C)   Wood does not have the CFA designation and the position of ATX in the trust fund of Wood’s children.

Q10. With respect to the pension fund for Evergreen International, Black’s fiduciary duty is:

A)   to the participants, beneficiaries, and management of Evergreen International. Therefore, Black should increase the portion in international equities as long as it is within policy statement guidelines.

B)   owed to the participants and beneficiaries of Evergreen International. Therefore, Black should continue to manage the fund in their best interest regardless of the management's request.

C)   primarily to the management and stockholders of Evergreen International. Black should follow management's direction to potentially increase the value of the company.

 

Q11. With respect to the pension fund for Evergreen International, after Wood notices Black’s actions concerning the management’s instructions, he should:

A)   report Black’s activities to the police.

B)   try to distance himself from Black’s activities.

C)   do nothing because he knows what Black said about the covered call properties and her record is true.

Q12. With respect to Wood preparing to set up his own business, Wood violated the Standards:

A)   in his communication with his friend.

B)   in his communication with his cousin.

C)   by setting up trading accounts in the name of his company.

 

Q13. Violations with respect to the use of the CFA designation occurred with:

A)   both the printing of the business cards by Black and the letters sent by Wood to his friend and cousin.

B)   the letters sent by Wood to his friend and cousin but not with the printing of the business cards by Black.

C)   the printing of the business cards by Black but not the letters sent by Wood to his friend and cousin.

[此贴子已经被作者于2009-1-9 15:50:16编辑过]

mayanfang1

答案和详解如下：

Q9. Correct answer is B)

This question is related to Disclosure of Conflicts, Standard VI(A). Black’s relationship with ATX Corporation must be disclosed in the research report because it could impair Black’s ability to make an unbiased judgment. Under the same standard, the position of ATX in the children’s trust fund must be mentioned because it is beneficial ownership that could reasonably impair Wood’s judgment. Even though Wood is the one writing the report, both potential conflicts need to be disclosed since Black is supervising Wood. The fact Black requires Wood to get her approval, which is congruent with Standard IV(C), is simply a routine firm policy that does not need reporting. It is not required to mention that an analyst does not have the CFA designation.

Q10. Correct answer is B)

This question relates to Standard III(A), Loyalty, Prudence, and Care. Black’s fiduciary duty is to the participants and beneficiaries of the pension plan according to ERISA. Black should act in their best interest in managing the funds.

Q11. Correct answer is B)

According to Standard I(A), Knowledge of the Law, members and candidates must know the law and not knowingly assist in breaking the law. When questionable activities occur like Black’s option trading, the best course of action for an associate is distance him/herself and seek legal counsel.

Q12. Correct answer is B)

Wood violated Standard IV(A), Loyalty to Employer by contacting his cousin and advising him because the cousin could potentially be a client for his current firm. Since the friend had said he would not do business with Black, and Wood gave him no instructions, that was not a violation. Note that Standard IV(A) covers competing with an employer, not preparing to compete. Preparing to compete by setting up an office and other related activities are not a violation of the Standards.

Q13. Correct answer is B)

Standard VII(B), Reference to CFA Institute, the CFA Designation, and the CFA Program, limits the use of the CFA designation to those who have passed all three levels of the CFA Program, have received their charters, and are charter holders in good standing. Wood may not put “CFA (expected 200X)” following his name because it is a violation of the Standard. However, he may state that he is a Level III candidate in the CFA program if he wishes. The printing of the business cards was not a prudent move, but since they are taking care not to distribute them until the appropriate time, no violation has occurred. In some sense, it is like a research report written in advance of an anticipated event. As long as the report is not released until after the event, no violation has occurred.

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