Q16.A portfolio manager must determine the client’s constraints, which may include all of the following EXCEPT the client’s:

A)   tax considerations.

B)   mortgage payment.

C)   liquidity needs.

Q17.Stephen Rangen, a former broker, had three accounts consisting of unsophisticated, inexperienced individual investors with limited means. One of these accounts was an elderly couple. The clients wanted to invest in safe, income-producing investments. They relied heavily on Rangen’s advice and expected him to initiate most transactions in their respective accounts. In managing their accounts, Rangen pursued the following strategies: (1) bought U.S. treasury strips and non-dividend paying over-the-counter stocks, (2) used margin accounts, and (3) concentrated the equity portion of their portfolios in one or two stocks. Rangen’s approach led to extremely high turnover rates in all three accounts. The Securities and Exchange Commission sanctioned Rangen for unsuitable recommendations and excessive trading in several accounts.

For this specific situation, which of the following is least likely to be an appropriate compliance procedure involving Standard III(C), Suitability? The broker should:

A)   avoid using material nonpublic information received in confidence to benefit clients.

B)   develop an investment policy statement for each client.

C)   assess and document each client's risk tolerance.

Q18.For this specific situation, all of the following are appropriate compliance procedures involving Standard III(C), Suitability, EXCEPT:

A)   reviewing investment policy statements regularly.

B)   complying with any prohibitions on activities imposed by their employer if a conflict of interest exists.

C)   educating clients about selecting appropriate asset allocations and strategies.

答案和详解如下：

Q16.A portfolio manager must determine the client’s constraints, which may include all of the following EXCEPT the client’s:

A)   tax considerations.

B)   mortgage payment.

C)   liquidity needs.

Correct answer is B)

The mortgage payment per se is of interest to the portfolio manager only insofar as it affects the bigger picture issues such as liquidity needs, cash flow, etc.

Q17.Stephen Rangen, a former broker, had three accounts consisting of unsophisticated, inexperienced individual investors with limited means. One of these accounts was an elderly couple. The clients wanted to invest in safe, income-producing investments. They relied heavily on Rangen’s advice and expected him to initiate most transactions in their respective accounts. In managing their accounts, Rangen pursued the following strategies: (1) bought U.S. treasury strips and non-dividend paying over-the-counter stocks, (2) used margin accounts, and (3) concentrated the equity portion of their portfolios in one or two stocks. Rangen’s approach led to extremely high turnover rates in all three accounts. The Securities and Exchange Commission sanctioned Rangen for unsuitable recommendations and excessive trading in several accounts.

For this specific situation, which of the following is least likely to be an appropriate compliance procedure involving Standard III(C), Suitability? The broker should:

A)   avoid using material nonpublic information received in confidence to benefit clients.

B)   develop an investment policy statement for each client.

C)   assess and document each client's risk tolerance.

Correct answer is A)

The prohibition against use of material nonpublic information refers to Standard II(A), not Standard III(C), Suitability.

Q18.For this specific situation, all of the following are appropriate compliance procedures involving Standard III(C), Suitability, EXCEPT:

A)   reviewing investment policy statements regularly.

B)   complying with any prohibitions on activities imposed by their employer if a conflict of interest exists.

C)   educating clients about selecting appropriate asset allocations and strategies.

Correct answer is B)         

Standard VI(A), Disclosure of Conflicts, refers to complying with any prohibitions on activities imposed by their employer if a conflict of interest exists and, therefore, is unrelated to Standard III(C).

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