Ethics and Professional Standards - 4

10 questions

1. 1. Dan Gracia, CFA serves as a proctor for administering the CFA exam in a city. As a part of his job, he reviews a copy of the CFA Level I exam one day prior to the exam. He shares some information about the questions in the exam with one of the candidates. Is there a violation of Standard VII Responsibilities of a CFA Institute Member or CFA Candidate?
   Dan Gracia has violated the standard.The candidate has violated the standard.Both Dan and Gracia have violated the standard.
2. 2. According to Standard VII (B) Reference to CFA Institute, the CFA Designation & the CFA Program, which of the following is improper reference to the CFA designation?
   Tony Hill passed all three CFA examinations in three consecutive years.I passed Level I of the CFA exam.As a CFA charterholder, I am the most qualified to manage client investments.
3. 3. Alan Reese has earned both his CFA designation and an MBA in Finance. To comply with the CFA Institute Code and Standards, what is the correct method to cite her accomplishments on her business card?
   First cite CFA designation, followed by her MBA degreeFirst cite MBA degree, followed by CFA designationAlan is free to cite the CFA designation either before or after citing his MBA degree.
4. 4. Tony Clark, CFA manages the portfolios of high net worth individuals at a money management firm. One of his close friends, Rob runs a charity for women’s health in underdeveloped countries. Rob asks Tony to provide him a list of some of his clients who will be willing to give them some donation on which they will get tax deduction. Because Tony things that this is a good cause and will also help his clients in tax planning, he gives a list of clients to Rob. Has tony violated the CFA Institute Standard of Professional Conduct?
   Yes, he as violated the standardNo, because he is doing this for a charitable causeNo, because he is helping his clients in tax saving
5. 5. Which of the following is not one of the nine major sections of GIPS standards?
   Private EquityInvestment objectivesDisclosure
6. 6. With respect to GIPS standards, which of the following statements is FALSE?
   If local laws conflict with GIPS standards, the firm should comply with GIPS standards, along with disclosing the conflict.Firms should show GIPS-compliant history for a minimum of five years (or since inception if less than five years)Only those investment management firms that actually manage assets can claim compliance with GIPS standards.
7. 7. Which of the following statements with respect to the definition of the firm in GIPS standards is FALSE?
   A firm must be defined as an investment firm.Total firm assets must be the aggregate fair value of all discretionary and non-discretionary assets managed by the firm.If there are changes in a firm’s organization it should alter the historical composite performance.
8. 8. Which of the following is not true about compliance with GIPS standards?
   Must apply GIPS standards on a firm-wide basis.Once a firm is GIPS compliant, it need not submit a compliant presentation of the composites to the clients.Do not make any other statements that may indicate partial compliance with the GIPS standards.
9. 9. Which of the following is FALSE about verification of compliance with GIPS?
   Verification of GIPS compliance is compulsory A firm may hire an independent third party to verify its claim of GIPS compliance.Verification of compliance with GIPS is on a firm-wide basis.
10. 10. Which of the following is the correct use of a compliance statement as per GIPS standards?
    Alpha Investments has prepared and presented this report in compliance with the Global Investment Performance Standards (GIPS®).The calculation methodology is in compliance with the Global Investment Performance Standards (GIPS®).The portfolio of our client NewCorp is in compliance with the Global Investment Performance Standards (GIPS®).