CFALevel1MockExam1PManswer

1、Question 1 James Cox, CFA, is employed by a London investment banking firm. Firm policy states that employees must pay for their own meals and entertainment if they go out socially with vendors or prospective vendors of the company. Thomas Wheelwright, a representative of a major securities information service, invites Cox out for a dinner. Wheelwright insists on paying for the evening. If Cox allows Wheelwright to pay for the dinner, Cox has violated: A)company policy but not the Code and Stand

2、ards. B)both company policy and the Code and Standards. C)company policy but not the Code and Standards as long as the firm receives full disclosure of Coxs potential conflict of interest. D)neither company policy nor the Code and Standards because the social engagement was not directly related to company business. The correct answer was B) both company policy and the Code and Standards. While accepting a simple dinner is likely not a violation of the Standards, Standard IV(A) Duties to Employer

3、s - Loyalty requires that firm policies be followed. Thus Cox would violate both company policy, designed to minimize potential conflicts involving employees and vendors, and the Standards. This question tested from Session 1, Reading 2-I, LOS B. Question 2 Sandra Fellows, CFA, received a telephone call from one of her clients at Boston Financial offering her the free use of the clients vacation home on Cape Cod the following summer. The client stated that the offer was given in appreciation for

4、 their many years of working together. To be in compliance with the Code and Standards, Fellows: A)may accept the offer only if her supervisor is informed and gives consent. B)may accept the offer without disclosure because the benefit is not contingent upon performance. C)must decline the offer. D)may accept the offer but must inform her employer of the gift. The correct answer was D) may accept the offer but must inform her employer of the gift. To comply with Standard I(B) Independence and Ob

5、jectivity and Standard IV(B) Additional Compensation Arrangements, any benefit or compensation a member receives from a client that is in addition to employer-paid compensation or benefits must be disclosed to the members employer. Since the offer is not contingent on future performance, written permission is not required. (See Example 7 for Standard I(B) in the Standards of Practice Handbook.) This question tested from Session 1, Reading 2-IV, LOS B. Question 3 Lunar Investment Management is a

6、subsidiary of a larger company, Galaxy Financial. Lunars CEO, Travis Howry, would like to have Lunar present GIPS-compliant performance data and has taken the steps necessary to ensure that Lunars performance presentation is compliant. He asks Galaxys President, Don Wiggins, about Galaxys interest in presenting GIPS-compliant performance data. Wiggins informs Howry that Galaxy is not interested. Lunar may: A)not claim compliance because compliance must be made on a company-wide basis. B)claim pa

7、rtial compliance if Lunars performance presentations are in compliance but disclose that Galaxys are not and in what ways. C)claim compliance as long as Lunar is advertised as a distinct business entity, separate from Galaxy. D)not claim compliance unless Galaxys ownership of Lunar is less than 50%. The correct answer was C) claim compliance as long as Lunar is advertised as a distinct business entity, separate from Galaxy. Lunar can claim compliance as long as it has met the reporting requireme

8、nts necessary and is held out to clients (advertised) as a distinct business entity. Partial compliance is not allowed. Ownership percentage is not an issue here. This question tested from Session 1, Reading 4, LOS b Question 4 Sally Fiedler, CFA, is a portfolio manager for Asipre Investments, Inc. In her spare time Fiedler intends to manage the small endowment fund for her childrens private day school. She believes it will only take a couple of hours each weekend and she will receive a discount

9、 on tuition for her two children. According to Standard IV(B) Additional Compensation Arrangements, Fiedler: A)must inform her employer of the arrangement but need not get permission as the time commitment is small. B)must inform her employer and get permission, either verbal or written. C)must inform her employer of all the details of this arrangement and receive written permission. D)need not inform her employer because it will be on her own time and there is no actual compensation received. The correct answer was C) must inform her employer of all the details of this arrangement and receive written permission. Standard IV(B), Additional Compensation Arrangements requires that employees who perform independent practice for compensation (of any type) must inform their employer of all the details, including compensation and the duration of the agreement, and receive wri

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