Q6. All of the following are required by fiduciaries under Standard III(A), Loyalty, Prudence, and Care, EXCEPT:

A)   act solely in the interest of the ultimate beneficiaries.

B)   support the sponsor's management during proxy fights.

C)   place the client’s interest before the employer’s interest.

Q7. Tony Calaveccio, CFA, is the manager of the TrustCo Small Cap Venture Fund in Toronto. Calaveccio places a trade with Quantco Brokerage. While Calaveccio's part of the transaction was conveyed correctly to Quantco, there was a trading error made in Calaveccio's account due to a slip up within Quantco. Calaveccio realizes that the error has taken place, and informs his contact at Quantco. Calaveccio allows Quantco to cover the error, with no cost to TrustCo. This is:

A)   permissible under CFA Institute Standards since some trading errors are a fact of life in the securities industry.

B)   a violation of Calaveccio's duty to his employer.

C)   a violation of Calaveccio's fiduciary duties.

Q8. In order to comply with Standard III(A), Loyalty, Prudence, and Care, an analyst needs to:

A)   perform both of the actions listed here.

B)   comply with applicable fiduciary duty.

C)   liquidate his personal holdings of all stocks that his client owns.

Q9. An analyst with his own money management firm trades on behalf of several large pension funds. The analyst now performs all trades through a particular brokerage firm because the brokerage provides his firm with a no-interest line of credit if paid within 60 days. The line of credit is available to all brokerage clients. The brokerage provides the analyst with personal account privileges that he would not otherwise be eligible for. The brokerage also provides the analyst with free research reports on many companies. Which of these benefits are violations of Standard III(A), Loyalty, Prudence, and Care?

A)   Neither of these.

B)   The personal account privileges.

C)   The research reports.

答案和详解如下：

Q6. All of the following are required by fiduciaries under Standard III(A), Loyalty, Prudence, and Care, EXCEPT:

A)   act solely in the interest of the ultimate beneficiaries.

B)   support the sponsor's management during proxy fights.

C)   place the client’s interest before the employer’s interest.

Correct answer is B)

Members are required to act in the interest of their clients. In voting proxies, the client’s interest must prevail over management’s interest.

Q7. Tony Calaveccio, CFA, is the manager of the TrustCo Small Cap Venture Fund in Toronto. Calaveccio places a trade with Quantco Brokerage. While Calaveccio's part of the transaction was conveyed correctly to Quantco, there was a trading error made in Calaveccio's account due to a slip up within Quantco. Calaveccio realizes that the error has taken place, and informs his contact at Quantco. Calaveccio allows Quantco to cover the error, with no cost to TrustCo. This is:

A)   permissible under CFA Institute Standards since some trading errors are a fact of life in the securities industry.

B)   a violation of Calaveccio's duty to his employer.

C)   a violation of Calaveccio's fiduciary duties.

Correct answer is A)

The issue is similar to an allocation of soft dollars. Clearly, if the broker absorbs the loss, they expect to make up the difference in some way. However, since the error was on the part of Quantco Brokerage, Calaveccio is under no obligation to cover the cost of the trading error. Moreover, no reasonable observer expects that there exists any implied future allocation of trades to Quantco in return for correcting their own mistake. There is no violation of Standard III(A), Loyalty, Prudence, and Care.

Q8. In order to comply with Standard III(A), Loyalty, Prudence, and Care, an analyst needs to:

A)   perform both of the actions listed here.

B)   comply with applicable fiduciary duty.

C)   liquidate his personal holdings of all stocks that his client owns.

Correct answer is B)         

To comply with Standard III(A), the analyst must use reasonable care and exercise prudent judgment, always act for the benefit of clients, and determine and comply with applicable fiduciary duty. Charging some “average” fee is not required.

Q9. An analyst with his own money management firm trades on behalf of several large pension funds. The analyst now performs all trades through a particular brokerage firm because the brokerage provides his firm with a no-interest line of credit if paid within 60 days. The line of credit is available to all brokerage clients. The brokerage provides the analyst with personal account privileges that he would not otherwise be eligible for. The brokerage also provides the analyst with free research reports on many companies. Which of these benefits are violations of Standard III(A), Loyalty, Prudence, and Care?

A)   Neither of these.

B)   The personal account privileges.

C)   The research reports.

Correct answer is B)         

The personal account privileges are clearly a violation. The no-interest line of credit could be a violation if the analyst does not factor in the benefits when determining the fees of the clients, but it is not a per se violation. Research reports are least likely to be a violation.

thanks

thx