1. An investment management firm has been hired by SEK Corporation to work on an initial public offering for the company. The firm's brokerage unit now has a sell recommendation on SEK, but the head of the investment-banking department has asked the head of the brokerage unit to change the recommendation from sell to buy. According to the Standards, the head of the brokerage unit would be permitted to:
A.increase the recommendation by no more than one increment (in this ease, to a hold recommendation).
B.place the company on a restricted list and give only factual information about the company.
C.reassign responsibility for rating the stock to the head of the investment-banking department.
2. Scott, CFA, is an analyst for M&D Investment Managers. He has recently accepted an invitation to visit the facilities of ChemCo, a producer of chemical compounds, ChemCo offers to pay for Scott's accommodations in a penthouse suite at a luxury hotel and allow Scott to use the firm's private jet to travel to its three facilities located in New York, Boston and Philadelphia. In addition, ChemCo offers two tickets to a high-society dinner in New York and a calculator with the ChemCo logo. Scott declines to use Chemco's corporate jet or to allow the firm to pay for his accommodations but accepts the calculator and the tickets to the dinner (which he discloses to his employer) since he will be able to market his firm's mutual funds to other guests at the dinner. Has Scott violated the Code and Standards?
A.Yes.
B.No, since he is using the gifts accepted to benefit his employer's interests.
C.No, since the gifts he accepts were fully disclosed in writing to his employer.
3. Kenneth, CFA, has just started work as a trainee with Jerron Asset Management Co., a small regional money management firm started six months ago. He has been told to make a few cold calls and round up some new clients. In which of the following statement has Kenneth least likely violated the Code and Standards?
A."We can perform all the financial and investment services you need. We've consistently outperformed the market indexes and will continue to do so under our current management."
B."We can assist you with all the financial and investment services you need. If we don't provide the service in-house, we have arrangements with other full-service firms that I would be happy to tell you about."
C."Our firm has a long history of successful performance for our clients. While we can't guarantee future results, we do believe that we will continue to benefit our clients."
4. Edwin, CFA, obtained a copy of a computerized stock selection model designed by a former MBA classmate who is a Wall Street analyst. After spending some time reviewing the program and making some adjustments, Edwin showed the new model to his supervisor. His supervisor said he did a great job and told Edwin to incorporate the new model in his next industry review. He called his old classmates for permission, and she told him to go head and use the model, which he did without reference to his former classmate. Edwin has:
A.violated Standard Ⅰ (C) Misrepresentation.
B.violated Standard Ⅲ (E) Preservation of Confidentiality.
C.violated Standard Ⅴ (B) Communication with Clients and Prospective Clients.
5. John, CFA, act as Liaison between Ressole Financial and DHK Inc. (an investing bank). When DHK underwrites an IPO, John routinely has DHK issue vague statements implying that the firm has cash flows, financial resources, and growth prospects that are better than is the case in reality. This action is a violation of the section of the Standards concerning:
6. An investment-banking department of a brokerage firm often receives material nonpublic information that could have considerable value if used in advising the firm's brokerage clients. In order to conform to the Code and Standards, which one of the following is the best policy for the brokerage firm?
A.Establish physical and informational barriers within the firm to prevent the exchange of information between the investment-banking and brokerage operations.
B.Permanently prohibit both purchase and sell recommendations of the stocks of clients of the investment-banking department.
C.Monitor the exchange of information between the investment-banking department and the brokerage operation.
7. Amato, an island nation, does not have any regulations precluding the use of non-public information. Darcy has a friend and fellow CFA charter holder there with whom he has shared nonpublic information regarding firms outside of her industry. The information concerns several firms' internal earnings and cash flow projections. The friend may:
A.trade on the information under the laws, which govern her behavior.
B.not trade on the information under CFA Institute Standards, which govern her behavior.
C.trade on the information under CFA Institute Standards since the firms concerned are outside of Darcy's industry.
9. Alex, CFA, is a portfolio manager at OLC Asset Manager, which specializes in managing labor union pension fund accounts. A friend of Alex's who is an investment banker asks Alex to purchase shares in their new IPOs in order to support the price long enough for insiders to liquidate their holdings. Alex realizes that the price of the shares will almost certainly fall dramatically after his buying support ceases. DLC management "strongly suggest" that Alex "not rock the boat" and honor the investment banker's request since DLC has had a long-standing relationship with the investment bank. Alex agrees to make the purchase. Which of the following statements is most likely to be correct?
A.Alex has not violated the Code and Standards.
B.Alex has violated the Code and Standards by attempting to distort prices.
C.Alex has violated the Code and Standards by failing to place orders in the appropriate transaction priority.
10. In order to dispel the myth that the emerging market stocks are illiquid investments, NYK, a "long only" emerging market fund manager, has two of its subsidiaries simultaneously buy and sell emerging market stocks. In its marketing literature, NYK cites the overall emerging market volume as evidence of the market's liquidity. As a result of its actions, more investors participate in the emerging markets fund. Which of the following is most likely correct? NYK:
A.did not violate the Code and Standards.
B.violated the Code and Standards by manipulating the volume in the emerging securities markets.
C.would not have violated the Code and Standards if the subsidiaries only traded stocks included in the fund.
11. All of the following statements about a manager's use of clients' brokerage commissions are true except:
A.a client may direct a manager to use the client's brokerage commissions to purchase goods and services for that client.
B.client brokerage commissions should be used to benefit the client and should be commensurate with the value of the brokerage and research services received.
C.client brokerage commissions may be directed to pay for the investment manager's operating expenses.
12. Joanna, CFA, manages several pension accounts and directs most of her trades through the Torrenia Brokerage House. Joanna does this because she believes she gets expedient and low-cost trade execution, and Torrenia provides her with excellent research reports used in the management of these accounts. ZNS, a small brokerage house, has just approached Joanna and said it will execute her trades at half the cost of Torrenia. However, ZNS does not have a research department. If Joanna declines to switch her business to ZNS, has she violated any CFA Institute Standards?
A.Yes, because she has not obtained explicit permission from her clients to use ZNS.
B.Yes, because Standard Ⅲ (A) Loyalty, Prudence and Care states that she must minimize trade expenses.
C.No, if the higher commissions are commensurate with the value of the research service she receives.
13. Scan, CFA, is a portfolio manager for RBS Investment Management Company-a registered investment organization that advises investment companies and private accounts-was promoted to that position three years ago. Richard, his supervisor, is responsible for reviewing Sean's portfolio account transactions and his required monthly reports of personal stock transactions. Scan has been using Marcy, a broker, almost exclusively for portfolio account brokerage transactions. For securities in which Marcy's firm makes a market, Marcy has been giving Scan lower prices for personal purchases and higher for personal sales than Marcy gives to Sean's portfolio accounts and other investors. Sean has been filing monthly reports with Richard only for those months in which he has no personal transactions. Which of the following is least likely to be a violation of the Code and Standards?
A.Scan failed to disclose to his employer his personal transactions.
B.Richard failed enforce reasonable procedures for supervising and monitoring Sean's trading for his own account.
C.Richard allowed Scan to use Marcy as his broker for personal trades.
14. Stanley, CFA, a research analyst with a brokerage firm, decides to change his recommendation on the common stock of Vellon Company, Inc., from a buy to a sell. He mails this change in investment advice to all the firm's clients on Thursday. The day after the mailing, a client calls with a buy order for 5000 shares of Vellon Company. In this circumstance, Stanley should:
A.accept the order.
B.advise the customer of the change in recommendation before accepting the order.
C.not accept the order because it is contrary to the firm's most recent recommendation.
15. Angus, CFA, is a principal at Nelson Brothers, a leading regional investment bank specializing in initial public offering of small to mid-sized biotech firms. Just before many of IPOs are offered to the general public, Angus arranges for 10% of the shares of the firm going public to be distributed to management by Nelson Brothers. This action is a violation of the Standard concerning:
16. Steven, CFA, manages a portfolio for Derek, a very wealthy client. Derek's portfolio is well diversified with a slight tilt toward capital appreciation. Derek requires very little income from the portfolio. Recently Derek's brother, Simon, has become a client of Steven. Steven proceeds to invest Simon's portfolio in a similar manner to Derek's portfolio based on the fact that both brothers have a similar lifestyle and are only two years apart in age. Which of the following statements is most likely correct?
A.Steven violated the Code and Standards by knowingly creating a conflict of interest between Derek's and Simon's portfolios.
B.Steven violated the Code and Standards by failing to determine Simon's objectives and constraints prior to investing his portfolio.
17. In the marketing brochure, TBC Asset Manager presents the performance of several composite portfolios managed according to similar investment strategies. In constructing composites, the firm excludes individual portfolios with less than $1 million in assets, excludes terminated portfolios, and includes simulated results. TBC includes the following disclosure in the brochure: "Past performance is no guarantee of future results. Composites exclude portfolios under $1 million in assets and include results from simulated model portfolios with similar strategies." TBC's brochure:
A.does not violate the Code and Standards.
B.violate the Code and Standards by excluding portfolios under $1 million from the composite performance presentation.
C.violate the Code and Standards by failing to include terminated portfolios in the performance presentation.
18. Daisy, CFA, is a portfolio manager for several wealthy clients including Dennis. Daisy manages Dennis's personal portfolio and bond investments. Dennis recently told Colin that he is under investigation by the Internal Revenue Service (IRS) for tax evasion related to his business, Dennis Software. After learning about the information, Daisy proceeds to inform a friend at a local investment bank so that they may withdraw their proposal to take Dennis Software public. Which of the following is most likely correct? Daisy:
A.violate the Code and Standards by failing to maintain the confidentiality of his client's information.
B.violate the Code and Standards by failing to detect and report the tax evasion to the proper authorities.
C.do not violate the Code and Standards since the information she conveyed pertained to illegal activities on the part of her client.
19. Jessica, CFA, works full-time for KB&C, an investment management firm, as a fixed-income security analyst. Jessica has been asked by a business contact at IDN Enterprise to accept some analytical work from IDN on a consulting basis. Jessica should most appropriately:
A.accept the work as long as she obtains consent from KB&C.
B.not accept the work as it violates the Code and Standards by creating a conflict of interest.
C.accept the work as long as she obtains written consent from IDN and does it on her own time.
20. Susan, CFA, is a portfolio manager. One of her firm's clients has told Susan that he will compensate her beyond that provided by her firm on the basis of the capital appreciation of his portfolio each year. Susan should:
A.turn down the additional compensation because it will result in conflicts with the interests of other clients' accounts.
B.obtain permission from her employer prior to accepting the compensation arrangement.
C.turn down the additional compensation because it will create undue pressure on her to achieve strong short-term performance.
21. Frank, CFA, heads the research department of a large brokerage firm. The firm has many analysts, some of whom are subject to the Code and Standards. If Frank delegates some supervisory duties, which statement best describes her responsibilities under the Code and Standards?
A.Frank's supervisory responsibilities do not apply to those subordinates who are not subject to the Code and Standards.
B.Frank no longer has supervisory responsibility for those duties delegated to her subordinates.
C.Frank retains supervisory responsibilities for all subordinates despite her delegation of some duties.
22. Charles, CFA, is a managing director at NSSI, a regional brokerage firm. Charles manages the institutional fixed-income desk and is responsible for 20 employees in both the trading and sales departments. Charles recently called a meeting with the head of trading and the head sales to review the firm's policies regarding trading by employees in their personal accounts. He instructed the two to review the information with the employees they supervise. A week after the meeting, Charles discovered that a sales assistant made personal trades during a firm "blackout" period on a restricted security. According to the Standard Ⅳ (C) Responsibilities of Supervisors, the least appropriate action for Charles to take is:
A.to speak directly to the employee and attain assurance that the violation will not be repeated.
B.begin an investigation to determine the extent of the wrongdoing.
C.increase the monitoring of the employee's activities at the firm.
23. Edgar, CFA, a financial analyst and avid windsurfer, has begun an investment survey of the water sports leisure industry. His brother sells windsurfing gear and tells him that McGorell 5, the newest product manufactured by McGorell Enterprises, is the "hottest windsurfing rig on the market and will be highly profitable for McGorell Enterprises." Edgar had never heard of McGorell previously but after testing the board himself became very excited about the McGorell 5 and issued an investment recommendation of "buy" on McGorell Enterprises. As a result of issuing the recommendation, Edgar has:
A.not violated the Code and Standards.
B.violated the Code and Standards by failing to establish a reasonable and adequate basis.
C.violated the Code and Standards by failing to consider the suitability of the investment of his clients.
24. 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 recommendation?
A.Have a policy requiring that research reports and recommendations have a basis that can be substantiated as a reasonable and adequate.
B.Compensate analysts based on measurable criteria to assess the quality of their research.
C.Review the assumptions used and evaluate the objectivity of externally generated research reports.
25. Jason, CFA, works for a regional brokerage firm. He estimates that RHG company will increase its dividend by $1.50 a share during the next year. He realizes that this increase is contingent on pending legislation that would, if enacted, give RHG a substantial tax break. The U.S. representative for RHG's home district has told Jason, that, although she is lobbying hard for the bill and prospects for passage look good, Congress's concern over the federal deficit could cause the tax bill to be voted down. RHG has not made any statements regarding a change in dividend policy. Jason writes in his research, "We expect RHG's stock price to rise by at least $8.00 a share by the end of the year. Because the dividend will increase by $1.50 a share, the stock price gain will be fueled, in large part, by the increase in the dividend. Investors buying the stock at the current time should expect to realize a total return of at least 15 percent on the stock." According to Standards:
A.Jason violated the Standards because he failed to separate opinion from fact.
B.Jason violated the Standards because he used material inside information.
26. Douglas, CFA, is a portfolio manager for TE&S Investments. The fixed-in-come desk at TE&S has developed a new structured product that produces positive returns in a very wide range of interest rate scenarios. Douglas thoroughly reads and evaluates an analytical report about the product and is impressed by its return profile. He faxes the cover page of the analysis, which includes the name of the author, to a client with objectives similar to that of the structured product, and handwrites a note the client saying, "I think you should act quickly on this." When the client calls requesting the entire report, Douglas informs that the research is proprietary and cannot be released. With respect to the CFA Institute Standards of Professional Conduct, is Douglas in violation of Standard Ⅴ (B) Communication with Clients or Prospective Clients or Standard Ⅲ (C) Suitability? Standard Ⅴ (B) Standard Ⅲ (C) ① No Yes ② Yes No ③ Yes Yes
27. Catherine, CFA, has just accept a new job as a quantitative analyst for Orisel Investment Management Company. Catherine developed a complex model while working for his previous employer and plans to recreate the model for Orisel. Catherine did not make copies of the model or any supporting documents since his employer refused to grant him permission to do so. Catherine will recreate the model from memory. Which of the following statements is most likely correct?
A.Catherine can recreate the model without violating the Code and Standards as long as she also generating supporting documentation.
B.Catherine can recreate the model without violating the Code and Standards without documentation if the model is modified from its original form.
C.Catherine cannot recreate the model without violating the Code and Standards because it is the property of his former employer.
28. Ward is a junior research analyst with JPS, a brokerage and investment-banking firm. JPS's mergers and acquisitions department has represented the Danier Company in all of its acquisitions for the past 20 years. Two of JPS's senior officers are directors of various Danier subsides. Ward has been asked to write a research report on Danier. What is the best course of action for him to follow?
A.Ward may write the report if she discloses the special relationships with the company in the report.
B.Ward may write the report but must refrain from expressing any opinions because of the special relationships between the two companies.
C.Ward should not write the report because the two JPS officers are constructive insiders.
30. Daniel, CFA, is an equity analyst with Prescott Securities. Based on his fundamental analysis, Daniel concludes that the stock of a company he follows, NSCH Inc., is substantially undervalued and will experience a large price increase. He delays revising his recommendation on the stock from "hold" to "buy" to allow his brother to buy shares at a lower price. According to the Standards, Daniel is least likely to have violated:
31. As part of an agreement with Johnny, TP&C Investment Company, a money manager for individual clients, provides monthly emerging market overviews in exchange for prospective client referrals and European equity research from Johnny. Clients and prospects of TP&G are not made aware of the agreement, but clients unanimously rave about the high quality of the research provided by Johnny. As a result of the research, many clients with non-discretionary accounts have earned substantial returns on their portfolios. Managers at TP&G have also used the research to earn outstanding returns for the firm's discretionary accounts. Which of the following statement is most likely correct?
A.Johnny has not violated the Code and Standards.
B.has violated the Code and Standards by using third-party research in discretionary accounts.
C.has violated the Code and Standards by failing to disclose the referral agreement with Johnny.
33. Jesse, CFA, is an exam proctor for the Level Ⅰ CFA exam. The day before the exam is to be administered, Jesse faxes a copy of one of the questions to two friends, Richard and Patrick, who are Level Ⅰ candidates in the CFA program. Jesse, Richard, and Patrick has planned the distribution of an exam question months in advance. Richard used the fax to prepare for the exam. Patrick, however, had second thoughts and threw the fax away without looking at its contents. Which of the following statements is most likely correct?
A.Richard violated the Code and Standards but Patrick did not.
B.Jesse violated the Code and Standards but Richard did not.
C.Richard and Patrick both violated the Code and Standards.
34. Sarah, CFA, is promoting her new investment management firm by issuing an advertisement. Which of these items is least likely a violation of the professional designation Standard? The advertisement states that:
A.she passed three exams covering ethics, financial statement analysis, asset valuation, and portfolio management and that she is a member of the local society. Sarah signs the advertisement followed by the letters CFA in oversized and bold strike letters.
B.she passed three 6-hour exams on her first attempts over the minimum period of one and a half years. Knowledge tested include ethics, financial statement analysis, asset valuation, and portfolio management. In addition, she is a member of the local society.
C.because of her extensive CFA training she will be able to achieve better investments results than non-CFA managers since she is one of very few professionals to have been awarded this designation.
35. At a regional conference for institutional portfolio managers, Chris makes three comments in a presentation centered on explaining for the creation of GIPS. Which of Chris's comments is least likely correct?
A.GIPS were created to reduce historical performance inflation caused by excluding results of terminated portfolios.
B.GIPS were created to encourage firms to select representative accounts when presenting investment results.
C.GIPS were created in response to performance reporting abuses which included only reporting results over periods of exceptional returns.
37. Which of the following statements most accurately describes the parties that GIPS are intended to apply to and serve?
A.GIPS apply to consultants and serve their existing and prospective clients.
B.GIPS apply to firms that issues securities and serve investment management firms.
C.GIPS apply to investment management firms and serve their existing and prospective clients.
A B C
C
[解析] GIPS标准适用于投资管理公司,制定该标准是为了服务于投资管理公司的现有客户和潜在客户。
38. Howard is trying to decide which of the following composite definitions, submitted by his junior analysts, would be considered a viable composite according to GIPS. Which composite will meet the Standards?
A.A composite that includes all accounts that are managed directly from the firm's Hong Kong office.
B.A composite that includes all actively managed portfolios but excludes passively managed portfolios.
C.A composite that includes all portfolios that are managed to provide a return approximately equal to that of the S&P Index.
39. An investment management firm, Derriot Inc., was recently audited by the United States Securities and Exchange Commission (SEC). Derriot included the following statement in its performance presentation report: "This report has been verified as GIPS compliant by Derriot's Compliance Department and the United States Securities and Exchange Commission." Does this constitute acceptable verification under GIPS?
A.No, only one party may perform GIPS verification.
B.No, neither party involved in the audit constitutes an acceptable GIPS verification.
C.Yes, because an audit was performed implicitly by the SEC and explicitly by the firm's internal audit team.
42. Terrison Asset Management Inc. is seeking to become compliant with GIPS. The firm has hired an independent consultant to assist in ensuring that Terrison's policies and procedures conform to the standards. Which of the following recommendations made by the consultant is least likely required under GIPS?
A.Terrison must disclose the results of an independent verification process in its composite presentations.
B.All of Terrison's accounts managed by third party advisers selected by Terrison must be included in the firm's composites.
C.Compliant presentations for discontinued composites must be made available to any prospect requesting one up to five years after discontinuation.
43. According to the Standard of Practice Handbook, a supervisor establishing procedures to eliminate conflicts of interest relating to personal trading would least likely recommend requiring:
A.a ban on employee investments.
B.disclosures of beneficial ownerships.
C.duplicate confirmations of employee transactions.
44. Stanley Crux, CFA, a portfolio manager at NWS Asset Management Ltd, calls a friend to join him for dinner. The friend, a financial analyst at D&M Corporation declines the invitation and explains that she is performing due diligence on Orca Electronics, a company that D&M is about to acquire. After the phone call, Crux searches the Internet for any news of the acquisition but finds nothing. Upon verifying that Orca is on NWS's approved stock list, Crux purchases Orca's common stock and call options for the NWS clients. Two weeks later, D&M announces its intention to acquire Orca. The next day, Crux sells all of the Orca securities, giving the fund a profit of $3 million. According to the Standards of Practice Handbook, did Crux violate any CFA Institute Standards of Professional Conduct?
A.No.
B.Yes, because he traded on material nonpublic information.
C.Yes, because he only purchased stock and options for selective clients, not all clients.