Chap 3 (done)

Which of the following is least likely required of fiduciaries who are responsible for pension plans?

• Judging investments in the context of the total portfolio.

• Supporting the sponsor's management during proxy fights.

• Acting solely in the interest of plan participants.

Choose the best option:

• is permitted to manage Peters' account without any knowledge of his risk preferences.

• may accept Peters' account but only manage his portfolio to a benchmark or index.

• must decline to enter into an advisory relationship with Peters.

Which of the following statements regarding allocating trades is CORRECT? It is permissible under the Standards to allocate trades:

• based upon any method the firm deems suitable so long as the allocation procedure has been disclosed to all clients.

• based upon compensation arrangements.

• on a pro-rata basis over all suitable accounts.

Which of the following would be a violation of Standard III(B), Fair Dealing?

• Trading for regular accounts before discretionary accounts.

• Limiting the number of employees privy to recommendations and changes.

• Having well defined guidelines for pre-dissemination.

Choose the best option:

• in violation of Standard III(A) "Loyalty, Prudence, and Care" for failing to consider the three securities in the context of the whole portfolio.

• not in violation.

• in violation of Standard III(A) "Loyalty, Prudence, and Care" for failing to make a reasonable inquiry into the client's investment experience.

An analyst meets with a new client. During the meeting, the analyst sees that the new client's portfolio is heavily invested in one over-the-counter stock. The analyst has been following the stock and thinks it will perform well in the long run. The analyst arranges through a brokerage firm to simultaneously sell a large number of shares of the stock via a series of cross trades from the new client's portfolio to various existing clients. He arranges the trades to be executed at a price that approximates the current market price. This action is:

• a violation of Standard III(B), Fair Dealing.

• a violation of Standard III(A), Loyalty, Prudence, and Care.

• not in violation of the Standards.

Which of the following is a possible breach of fiduciary duties by a CFA Institute member who manages assets on behalf of a client?

• Neither of these breach fiduciary duties.

• Voting all proxies of stocks the client owns.

• Using directed brokerage.

A money manager is meeting with a prospect. She gives the client a list of stocks and says, "These are the winners I picked this past year for my clients. Their double-digit returns indicate the type of returns I can earn for you." The list includes stocks the manager had picked for her clients, and each stock has listed with it an accurately measured return that exceeds 10%. Is this a violation of Standard III(D), Performance Presentation?

• No, because the manager had the historical information in writing.

• Yes, unless the positions listed constitute a complete presentation (i.e., there were no stocks omitted that did not perform in the double digits).

• Yes, because the manager cannot reveal historical returns of recent stock picks.

According to Standard III(A) Loyalty, Prudence and Care, brokerage is an asset of the:

• brokerage firm conducting the trades.

• client.

• managing firm.

Did Jackson violate Standard III(C) Suitability concerning portfolio recommendations and actions?

• Yes, because she did not deal fairly with all clients.

• No.

• Yes, because she did not consider the appropriateness and suitability of investment recommendations or actions for each portfolio or client.