1、 7476229133318632 March Mock Exam - PM March Mock Exam - PM 399388 Page 1 Question block created by wizard You have 180 minutes to complete this session. 1. Linda Chin, CFA, is a member of a political group advocating less governmental regulation in all aspects of life. She works in a country where
2、local securities laws are minimal and insider trading is not prohibited. Chins politics are reflected in her investment strategy, where she follows her countrys mandatory legal and regulatory requirements. Which of the following actions by Chin would be most consistent with the CFA Institute Standar
3、ds of Professional Conduct? A. Continuing her current investment strategy B. Following the CFA Institute Standards of Professional Conduct C. Disclosing her political advocacy to clients Answer = B “Guidance for Standards IVII,“ CFA Institute Standard I(A): Knowledge of the Law, Standard II(A): Mate
4、rial Nonpublic Information Standard I(A): Knowledge of the Law requires members and candidates to comply with the more strict law, rules, or regulations and follow the highest requirement, which in this case would be the CFA Institute Standards of Professional Conduct. Standard II(A): Material Nonpu
5、blic Information would also apply because members and candidates who possess material nonpublic information that could affect the value of an investment must not act or cause others to act on the information. Disclosure that she meets local mandatory legal requirementsversus the more strict law, rul
6、es, or regulations mandate of the Standards of Professional Conductwould not excuse the member from following the Standards of Professional Conduct. 2. Colleen ONeil, CFA, manages a private investment fund with a balanced global investment mandate. Her clients insist that her personal investment por
7、tfolio replicate the investments within their portfolios to assure them she is willing to put her own money at risk. By undertaking which of the following simultaneous investment actions for her own portfolio would ONeil most likely be in violation of Standard VI(B): Priority of Transactions? A. Sal
8、e of a listed US blue chip value stock B. Purchase of a UK government bond in the primary market C. Participation in a popular frontier market IPO Answer = C “Guidance for Standards IVII,“ CFA Institute Standard VI(B): Priority of Transactions Standard VI(B): Priority of Transactions dictates member
9、s and candidates give their clients and employer priority when making personal investment transactions. Even when clients allow or insist the manager invest alongside them, the managers transactions must never adversely affect the interests of the clients. A popular or “hot“ IPO in a frontier market
10、 is likely to be oversubscribed. In such cases, Standard VI(B) dictates that the manager should not participate in this event to better ensure clients will have a higher probability of getting their full subscription allotment, even though clients have allowed or dictated that she participate alongs
11、ide them. 【梦轩考资】 QQ106454842 专业提供CFA FRM全程高清视频+讲义7476229133318632 March Mock Exam - PM March Mock Exam - PM 399388 Page 2 3. Millicent Plain has just finished taking Level II of the CFA examination. Upon leaving the examination site, she meets with four Level III candidates who also just sat for the
12、ir exams. Curious about their examination experience, Plain asks the candidates how difficult the Level III exam was and how they did on it. The candidates say the essay portion of the examination was much harder than they had expected and that they were not able to complete all questions as a resul
13、t. The candidates go on to tell Plain about broad topic areas that were tested and complain about specific formulas they had memorized that did not appear on the exam. The Level III candidates least likely violated the CFA Institute Standards of Professional Conduct by discussing: A. specific formul
14、as. B. the examination essays. C. broad topic areas. Answer = B “Guidance for Standards IVII,“ CFA Institute Standard VII(A): Conduct as Members and Candidates in the CFA Program Discussing the level of difficulty of the essay portion of the examination did not violate Standard VII(A): Conduct as Me
15、mbers and Candidates in the CFA Program. Standard VII(A) and the Candidate Pledge were violated by candidates when they revealed broad topic areas and formulas tested or not tested on the exam. 4. Heidi Halvorson, CFA, is the chief investment officer for Tukwila Investors, an asset management firm s
16、pecializing in fixed-income investments. Tukwila is in danger of losing one of its largest clients, Quinault Jewelers, which accounts for nearly one-third of its revenues. Quinault recently told Halverson that Tukwila would be fired unless the performance of Quinaults portfolio improves significantl
17、y. Shortly after this conversation, Halvorson purchases two corporate bonds she believes are suitable for any of her clients based on third-party research from a reliable and diligent source. Immediately after the purchase, one bond increases significantly in price while the other bond declines sign
18、ificantly. At the end of the day, Halvorson allocates the profitable bond trade to Quinault and the other bond to two of her largest institutional accounts. Halvorson most likely violated the CFA Institute Standards of Professional Conduct in regard to: A. client suitability. B. third-party research
19、. C. trade allocations. Answer = C Guidance for Standards IVII,“ CFA Institute Standard III(B): Fair Dealing, Standard III(C): Suitability, Standard V(A): Diligence and Reasonable Basis The investment officer failed to deal fairly by allocating profitable trades to a favored client at the expense of
20、 others, a violation of Standard III(B): Fair Dealing. The standard requires members and candidates to treat all clients fairly when taking investment action. Tukwila should have a systematic approach to allocating trades, such as pro rata, before or at the time of trade execution, or as soon as pos
21、sible after trades are executed. The analyst believes the bonds are suitable for any of her clients, so she has not violated Standard III(C): Suitability. 【梦轩考资】 QQ106454842 专业提供CFA FRM全程高清视频+讲义7476229133318632 March Mock Exam - PM March Mock Exam - PM 399388 Page 3 5. Jack Steyn, CFA, recently beca
22、me the head of the trading desk at a large investment management firm that specializes in domestic equities. While reviewing the firms trading operations, he notices clients give discretion to the manager to select brokers on the basis of their overall services to the management firm. Despite the cl
23、ient directive, Steyn would most likely violate Standard III(A): Loyalty, Prudence, and Care if he pays soft commissions for which of the following services from the brokers? A. Database services for offshore investments B. Equity research reports C. Investment conference attendance Answer = A “Guid
24、ance for Standards IVII,“ CFA Institute Standard III(A): Loyalty, Prudence, and Care Standard III(A): Loyalty, Prudence, and Care stipulates that the client owns the brokerage. Therefore, members and candidates are required to use client brokerage only to the benefit of the clients (soft commissions
25、 policy). Because the firm specializes in domestic equities, an offshore investment database service would not benefit the clients. 6. Based on his superior return history, Vijay Gupta, CFA, is interviewed by the First Faithful Church to manage the churchs voluntary retirement plans equity portfolio
26、. Each church staff member chooses whether to opt in or out of the retirement plan according to his or her own investment objectives. The plan trustees tell Gupta that stocks of companies involved in the sale of alcohol, tobacco, gambling, or firearms are not acceptable investments given the objecti
27、ves and constraints of the portfolio. Gupta tells the trustees he cannot reasonably execute his strategy with these restrictions and that all his other accounts hold shares of companies involved in these businesses because he believes they have the highest alpha. By agreeing to manage the account ac
28、cording to the trustees wishes, does Gupta violate the CFA Institute Standards of Professional Conduct? A. Yes, because the restrictions provided by the trustees are not in the best interest of the members B. Yes, because the manager was hired based on his previous investment strategy C. No Answer =
29、 C “Guidance for Standards IVII,“ CFA Institute Standard III(A): Loyalty, Prudence, and Care A is correct. According to Standard III(A): Loyalty, Prudence, and Care, Guptas duty of loyalty, prudence, and care is owed to the participants and beneficiaries (members) of the pension plan. As a church pl
30、an, the restrictions are appropriate given the objectives and constraints of the portfolio. 【梦轩考资】 QQ106454842 专业提供CFA FRM全程高清视频+讲义7476229133318632 March Mock Exam - PM March Mock Exam - PM 399388 Page 4 7. Jorge Lopez, CFA, is responsible for proxy voting on behalf of his banks asset management cli
31、ents. Lopez recently performed a costbenefit analysis that showed the proxy-voting policies might not benefit the banks clients. As a result, Lopez immediately changes the proxy-voting policies and procedures without informing anyone. Lopez now votes client proxies on the side of management on all i
32、ssues, with the exception of major mergers in which a significant impact on the stock price is expected. Lopez least likely violated the CFA Institute Standards of Professional Conduct in regard to: A. costbenefit analysis. B. voting with management. C. proxy-voting policy disclosures. Answer = A “G
33、uidance for Standards IVII,“ CFA Institute Standard III(A): Loyalty, Prudence, and Care Performing a costbenefit analysis showing that voting all proxies might not benefit the client and concluding that voting proxies may not be necessary in all instances is not a violation of Standard III(A): Loyal
34、ty, Prudence, and Care. However, even though voting proxies may not be necessary in all instances, part of a members or candidates duty of loyalty under Standard III(A) includes voting proxies in an informed and responsible manner, which is not being done when Lopez automatically votes with manageme
35、nt on the majority of issues. In addition, members and candidates should disclose to clients their proxy-voting policies, including any changes to that policy, as required by Standard III(A), which has not been done. 8. Chris Rodriguez, CFA, is a portfolio manager at Nisqually Asset Management, whic
36、h specializes in trading highly illiquid shares. Rodriguez has been using Hon Securities Brokers almost exclusively when making transactions for Nisqually clients, as well as for his own relatively small account. Hon always executes Rodriguezs personal trades at a more preferential price than for Ro
37、driguezs clients accounts. This special pricing occurs regardless of whether or not Rodriguez personally trades before or after clients. Rodriguez should least likely do which of the following in order to comply with the CFA Institute Standards of Professional Conduct? A. Trade client accounts befor
38、e his own account. B. Eliminate the exclusive trading arrangement. C. Average trade prices across all trading accounts. Answer = C “Guidance for Standards IVII,“ CFA Institute Standard III(A): Loyalty, Prudence, and Care; Standard IV(A): Loyalty; Standard VI(B): Priority of Transactions Rodriguez is
39、 in violation of Standard IV(A): Loyalty, which requires that, in matters related to their employment, members and candidates must act for the benefit of their employer and not deprive their employer of the advantage of their skills and abilities, divulge confidential information, or otherwise cause
40、 harm to their employer. Rodriguez should not accept the special treatment from Hon; instead, he should ask Hon to lower costs for the transactions of his Nisqually clients. Rodriguez should not average transaction costs because his clients should be given the lower preferential prices according to
41、Standard III(A): Loyalty, Prudence, and Care. 【梦轩考资】 QQ106454842 专业提供CFA FRM全程高清视频+讲义7476229133318632 March Mock Exam - PM March Mock Exam - PM 399388 Page 5 9. When Abdullah Younis, CFA, was hired as a portfolio manager at an asset management firm two years ago, he was told he could allocate his wo
42、rk hours as he saw fit. At that time, Younis served on the board of three non-public golf equipment companies and managed a pooled investment fund for several members of his immediate family. Younis was not compensated for his board service or for managing the pooled fund. Youniss investment returns
43、 attract interest from friends and co-workers who persuade him to include their assets in his investment pool. Younis recently retired from all board responsibilities and now spends more than 80% of his time managing the investment pool for which he charges non-family members a management fee. Youni
44、s has never told his employer about any of these activities. To comply with the CFA Institute Standards of Professional Conduct with regard to his business activities over the past two years, Younis would least likely be required to disclose which of the following to his employer? A. Family investme
45、nt pool management B. Board activities C. Non-family member management fees Answer = B “Guidance for Standards IVII,“ CFA Institute Standard IV(B): Additional Compensation Arrangements, Standard VI(A): Disclosure of Conflicts Golf equipment is a business independent of the financial services industr
46、y such that any board obligations would not likely be considered a conflict of interest requiring disclosure according to Standard IV(B): Additional Compensation Arrangements. Standard IV(B) requires members and candidates to obtain permission from their employer before accepting compensation or oth
47、er benefits from third parties for the services that might create a conflict with their employers interests. Managing investments for family and non-family members could likely create a conflict of interest for Youniss employer and should be disclosed to his employer. 10. Tamlorn Mager, CFA, is an a
48、nalyst at Pyallup Portfolio Management. CFA Institute recently notified Mager that his CFA Institute membership was suspended for a year because he violated the CFA Institute Code of Ethics. A hearing panel also came to the same conclusion. Mager subsequently notified CFA Institute that he does not
49、accept the sanction or the hearing panels conclusion. Which of the following actions by Mager would be most consistent with the CFA Institute Professional Conduct Program? A. Providing evidence for his position to an outside arbitration panel B. Using his CFA designation upon expiration of the suspension period C. Presenting himself to the public as a CFA charterholder Answer = B “Code of Ethics and Standards of Professional Conduct,“ CFA Institute Code of Ethics and Standards of
