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CFA - Exams| Questions with 100% Verified Answers
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CFA - Exams| Questions with 100% VerifiedAnswers
Sarah Johnson, a portfolio manager, is offered a bonus directly by a client if
Johnson meets certain performance goals. To comply with the Standard that
governs additional compensation arrangements, Johnson should:
A. decline to accept a bonus outside of her compensation from her employer.
B. disclose this arrangement to her employer in writing and obtain her
employer's permission.
C. disclose this arrangement to her employer only if she actually meets the
performance goals and receives the bonus. - ✔️✔️B Johnson should disclose her
additional compensation arrangement in writing to her
employer and obtain her employer's written consent before accepting this offer,
in
accordance with Standard IV(B) Additional Compensation Arrangements.
A member or candidate who has supervisory responsibility:
A. should place particular emphasis on enforcing investment-related
compliance policies.
B. is responsible for instructing those to whom he has delegated authority
about methods to detect and prevent violations of the law and the Code and
Standards.
C. has complied with the Standards if she reports employee violations to upper
management and provides a written warning to the employee to cease such
,activities. - ✔️✔️B Members or candidates may delegate supervisory duties to
subordinates but remain
responsible for instructing them about how to detect and prevent violations.
Reporting
the violation and warning the employee are not sufficient to comply with
Standard
IV(C) Responsibilities of Supervisors. The supervisor must also take steps to
prevent
further violations while she conducts an investigation, such as limiting the
employee's
activity or increasing her monitoring of the employee. Supervisors should enforce
investment-related and non-investment related policies equally.
Which of the following actions is a required, rather than recommended, action
under the Standard regarding diligence and a reasonable basis for a firm's
research recommendations?
A. Compensate analysts based on a measure of the quality of their research.
B. Review the assumptions used and evaluate the objectivity of third-party
research reports.
C. Have a policy requiring that research reports and recommendations have a
basis that can be substantiated as reasonable and adequate. - ✔️✔️B Standard V(A)
Diligence and Reasonable Basis requires analysts who use third-party
research to review its assumptions and evaluate the independence and objectivity
of
the research. The other choices are recommended procedures for compliance
with the
Standard
, Claire Marlin, CFA, manages an investment fund specializing in foreign
currency trading. Marlin writes a report to investors that describes the basic
characteristics of her strategy, which is based on an expected appreciation of the
euro relative to other major currencies. Marlin shows the projected returns from
the strategy if the euro appreciates less than 5o/o, between 5o/o and 1 Oo/o, or
more
than 10o/o, while dearly stating that these forecasts are her opinion. Has Marlin
violated the Standard related to communication with clients?
A. Yes.
B. No, because she disclosed the basic characteristics of the investment.
C. No, because she distinguished fact from opinion and discussed how the
strategy may perform under a range of scenarios. - ✔️✔️A Standard V(B)
Communication with Clients and Prospective Clients requires that
members and candidates communicate the risk associated with the investment
strategy
used and how the strategy is expected to perform in a range of scenarios. These
scenarios
should include those different from the current trend. Marlin should have
discussed how
her strategy would perform if the euro depreciates instead of appreciating as she
expects.
If regulations do not specify how long to retain the documents that support an
analyst's conclusions, the Code and Standards recommend a period of at least:
A. five years.
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