Q1. When comparing the fiduciary responsibility under the Prudent Investor Rule (PIR) with that under the Prudent Man Rule (PMR), which of the following is TRUE? The PIR does:

A)    permit the delegation of investment responsibility to third parties; the PMR does not permit the delegation of investment responsibility to third parties.

B)    permit the delegation of investment responsibility to third parties; the PMR does permit the delegation of investment responsibility to third parties.

C)    not permit the delegation of investment responsibility to third parties; the PMR does permit the delegation of investment responsibility to third parties.

Q2. The new Prudent Investor Rule states that the practice of diversification:

A)   is not as important as generating current income.

B)   is expected in portfolios as a method of reducing risk.

C)   should not be practiced because it is too costly.

Q3. Which of the following statements about trustee actions is TRUE? Trustees must consider:

A)   an investment's risk/reward profile as it relates to the portfolio.

B)   the risk of an investment without regard to its return.

C)   neither the risk nor the return of the portfolio, instead focusing on trading costs.

Q4. Which of the following statements is part of the basic principles of the new Prudent Investor Rule?

A)   Current income for the trust is totally disregarded in favor of growth.

B)   Excessive trading and fees should be avoided.

C)   Trustees must consider each investment against its own merits.

答案和详解如下：

Q1. When comparing the fiduciary responsibility under the Prudent Investor Rule (PIR) with that under the Prudent Man Rule (PMR), which of the following is TRUE? The PIR does:

A)    permit the delegation of investment responsibility to third parties; the PMR does not permit the delegation of investment responsibility to third parties.

B)    permit the delegation of investment responsibility to third parties; the PMR does permit the delegation of investment responsibility to third parties.

C)    not permit the delegation of investment responsibility to third parties; the PMR does permit the delegation of investment responsibility to third parties.

Correct answer is A)

Under the PIR, delegation of investment to third parties is permitted, but this is not allowed under the PMR.

Q2. The new Prudent Investor Rule states that the practice of diversification:

A)   is not as important as generating current income.

B)   is expected in portfolios as a method of reducing risk.

C)   should not be practiced because it is too costly.

Correct answer is B)

The new Prudent Investor Rule states that diversification is expected as a method of reducing risk. This contrasts to the old Prudent Man Rule which measured each investment by its own merits and not in the context of the portfolio. Abandoning diversification because of costs is never mentioned, nor is there mention that diversification is mutually exclusive with delegating authority or generating current income.

Q3. Which of the following statements about trustee actions is TRUE? Trustees must consider:

A)   an investment's risk/reward profile as it relates to the portfolio.

B)   the risk of an investment without regard to its return.

C)   neither the risk nor the return of the portfolio, instead focusing on trading costs.

Correct answer is A)

The new Prudent Investor Rule states that an investment's risk/reward profile must be considered as it relates to the overall risk of the portfolio. Both risk and return must be considered in tandem.

Q4. Which of the following statements is part of the basic principles of the new Prudent Investor Rule?

A)   Current income for the trust is totally disregarded in favor of growth.

B)   Excessive trading and fees should be avoided.

C)   Trustees must consider each investment against its own merits.

Correct answer is B)         

Current income must be considered in tandem with the need for growth. Investments in a portfolio should be considered based on the contribution to the portfolio's risk. Diversification is expected to reduce risk.

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