Question 736
In terms of CFA Institute's Standards of Professional Conduct when dealing with the procedures for compliance per Standard III(A): Loyalty, Prudence, and Care, which of the following are factors that would aid in complying with this Standard?
I). Follow all the applicable laws and rules.
II). Diversification: all portfolios should be adequately diversified unless the plan guidelines state otherwise.
III). Deal fairly with all clients.
IV). Conflicts of interest: all conflicts must be disclosed.
I). Follow all the applicable laws and rules.
II). Diversification: all portfolios should be adequately diversified unless the plan guidelines state otherwise.
III). Deal fairly with all clients.
IV). Conflicts of interest: all conflicts must be disclosed.
Question 737
You meet a friend at lunch. He tells you that his firm, XYZ, has just landed a government contract that will double revenues at the firm. This will be announced at a news conference tomorrow.
I). You should advise clients to buy the stock as soon as you return to the office.
II). You should encourage your friend to disclose this information immediately.
III). You should refrain from trading on the information until it is publicly released.
I). You should advise clients to buy the stock as soon as you return to the office.
II). You should encourage your friend to disclose this information immediately.
III). You should refrain from trading on the information until it is publicly released.
Question 738
Assume the risk-free rate is 5%. The expected return on the market portfolio is 12%, and its standard deviation is 20%. A company has an expected return of 18%, a standard deviation of 90% and a correlation of 0.5 with the market. What is the company's Treynor ratio?
Question 739
Which of the following statements regarding individual and institutional investors is/are incorrect?
I). Individuals define risk as "losing money", while institutions view risk as variance (or standard deviation) of returns.
II). Individuals are categorized according to their personalities and unique circumstances, whereas institutions are categorized by the investment characteristics of those that have a beneficial interest in the portfolios of pension funds, endowment funds, banks, insurance companies and mutual funds.
III). Individuals are defined financially by their assets and goals (particularly as they related to their life cycle), while institutions are typically concentrated within precise asset and liability parameters.
IV). Institutions have great flexibility in selecting their investments, whereas individuals are managed and regulated by ERISA (Employee Retirement Income Security Act) as well as other legal constraints.
I). Individuals define risk as "losing money", while institutions view risk as variance (or standard deviation) of returns.
II). Individuals are categorized according to their personalities and unique circumstances, whereas institutions are categorized by the investment characteristics of those that have a beneficial interest in the portfolios of pension funds, endowment funds, banks, insurance companies and mutual funds.
III). Individuals are defined financially by their assets and goals (particularly as they related to their life cycle), while institutions are typically concentrated within precise asset and liability parameters.
IV). Institutions have great flexibility in selecting their investments, whereas individuals are managed and regulated by ERISA (Employee Retirement Income Security Act) as well as other legal constraints.
Question 740
Christina Boyer no longer pays her dues to the CFA Institute and is no longer a member, although she had successfully acquired her charter ten years ago. She no longer practices as a financial analyst and has been a homemaker for the past three years. At a dinner honoring her as the Volunteer of the Year for the local high school girl's softball team, the brochure has printed her name as Christina Boyer, CFA, and is introduced as such by the President of the softball league.