Q16.Stephen Rangen, a broker, has three accounts consisting of unsophisticated, inexperienced individual investors with limited means.  One of these accounts is an elderly couple.  The clients want to invest in safe, income-producing investments. They rely heavily on Rangen’s advice and expect him to initiate most transactions in their respective accounts. In managing their accounts, Rangen pursues the following strategies: (1) buys U.S. treasury strips and non-dividend paying over-the-counter (OTC) stocks recommended by his firm's research department, (2) uses margin accounts, and (3) concentrates the equity portion of their portfolio in one or two stocks.  Rangen’s approach leads to extremely high turnover rates in all three accounts.

Which of the following statements about Rangen is FALSE?

A)   Rangen has a fiduciary duty to each client.

B)   Rangen's conduct violates Standard III(C), Suitability.

C)   Rangen's conduct violates Standard IV(B), Additional Compensation Arrangements.

Q17.Which of the following statements about Rangen's conduct is TRUE? Rangen's conduct:

A)   meets the requirements of the Code and Standards because his firm's research department recommended the U.S. Treasury strips and non-dividend paying stocks.

B)   does not meet the requirements of the Code and Standards because his investment strategy is inconsistent with his clients' objectives.

C)   meets the requirements of the Code and Standards because his clients are aware of the risks that he is taking in managing their accounts.

Q18.The O’Douls (husband and wife) have decided to work with Jane Mack, CFA, to have her recommend an investment portfolio for them. The O’Douls are novice investors and Mack has determined their asset allocation model falls into the conservative category. After researching various investment options for the O’Douls, Mack has made a recommendation that they divide their account on a 25%/75% basis between shares of a computer peripherals manufacturing company her brokerage firm is underwriting and investment grade corporate bonds. The O’Douls are not aware that Mack’s firm is underwriting an offering of the company in question. Which CFA Institute Standard(s) has Mack violated given her actions?

A)   Standard V(A), Diligence and Reasonable Basis, and I(D), Misconduct.

B)   Standard III(B), Fair Dealing, and III(A), Loyalty, Prudence, and Care.

C)   Standard VI(A), Disclosure of Conflicts, and III(C), Suitability.

Q19.Carol Hull, CFA, is an investment advisor whose prospective client, Frank Peters, presents special requirements. To construct an investment policy statement for Peters, Hull inquires about Peters’ investment experience, risk and return objectives, and financial constraints. Peters states that he has a great deal of investment experience in the capital markets and does not wish to answer questions about his tolerance for risk or his other holdings. Under Standard III(C), Suitability, Hull:

A)   may accept Peters’ account but may only manage his portfolio to a benchmark or index.

B)   must decline to enter into an advisory relationship with Peters.

C)   is permitted to manage Peters’ account without any knowledge of his risk preferences.

答案和详解如下：

Q16.Stephen Rangen, a broker, has three accounts consisting of unsophisticated, inexperienced individual investors with limited means.  One of these accounts is an elderly couple.  The clients want to invest in safe, income-producing investments. They rely heavily on Rangen’s advice and expect him to initiate most transactions in their respective accounts. In managing their accounts, Rangen pursues the following strategies: (1) buys U.S. treasury strips and non-dividend paying over-the-counter (OTC) stocks recommended by his firm's research department, (2) uses margin accounts, and (3) concentrates the equity portion of their portfolio in one or two stocks.  Rangen’s approach leads to extremely high turnover rates in all three accounts.

Which of the following statements about Rangen is FALSE?

A)   Rangen has a fiduciary duty to each client.

B)   Rangen's conduct violates Standard III(C), Suitability.

C)   Rangen's conduct violates Standard IV(B), Additional Compensation Arrangements.

Correct answer is C)

No information in the case suggests that Rangen’s conduct violates Standard IV(B), Disclosure of Additional Compensation Arrangements.

Q17.Which of the following statements about Rangen's conduct is TRUE? Rangen's conduct:

A)   meets the requirements of the Code and Standards because his firm's research department recommended the U.S. Treasury strips and non-dividend paying stocks.

B)   does not meet the requirements of the Code and Standards because his investment strategy is inconsistent with his clients' objectives.

C)   meets the requirements of the Code and Standards because his clients are aware of the risks that he is taking in managing their accounts.

Correct answer is B)         

Rangen's actions are inconsistent with Standard III(C), Suitability, because his investment actions are neither appropriate nor suitable for each client. Even if his clients were aware of the risks, the portfolios that he constructed are inconsistent with their financial needs. Because he is in a position to control the volume and frequency of transactions in their accounts, he has control over the accounts. Although Rangen relies upon recommendations from his firm’s research department, he cannot shift blame to his employer because he must follow recommendations that are in the best interests of his clients.

Q18.The O’Douls (husband and wife) have decided to work with Jane Mack, CFA, to have her recommend an investment portfolio for them. The O’Douls are novice investors and Mack has determined their asset allocation model falls into the conservative category. After researching various investment options for the O’Douls, Mack has made a recommendation that they divide their account on a 25%/75% basis between shares of a computer peripherals manufacturing company her brokerage firm is underwriting and investment grade corporate bonds. The O’Douls are not aware that Mack’s firm is underwriting an offering of the company in question. Which CFA Institute Standard(s) has Mack violated given her actions?

A)   Standard V(A), Diligence and Reasonable Basis, and I(D), Misconduct.

B)   Standard III(B), Fair Dealing, and III(A), Loyalty, Prudence, and Care.

C)   Standard VI(A), Disclosure of Conflicts, and III(C), Suitability.

Correct answer is C)         

Mack is obliged to disclose the conflict of interest regarding her company’s IPO and to consider both the appropriateness and the suitability of the investment for her client. She has apparently failed in both respects.

Q19.Carol Hull, CFA, is an investment advisor whose prospective client, Frank Peters, presents special requirements. To construct an investment policy statement for Peters, Hull inquires about Peters’ investment experience, risk and return objectives, and financial constraints. Peters states that he has a great deal of investment experience in the capital markets and does not wish to answer questions about his tolerance for risk or his other holdings. Under Standard III(C), Suitability, Hull:

A)   may accept Peters’ account but may only manage his portfolio to a benchmark or index.

B)   must decline to enter into an advisory relationship with Peters.

C)   is permitted to manage Peters’ account without any knowledge of his risk preferences.

Correct answer is C)         

Hull would not violate Standard III(C), Suitability, by managing Peters’ account without knowledge of his risk preferences. She made a reasonable inquiry into Peters’ investment experience, risk and return objectives, and financial constraints, as the Standard requires. If a client chooses not to provide some of this information, the member or candidate can only be responsible for assessing the suitability of investments based on the information the client does provide.

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