fin 461 exam 2 WITH ANSWERS
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Which of the following best describes a CA Institute member's
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duty under CA Institute Standard III (E): Preservation of
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Confidentiality? Members are required to keep client information |\ |\ |\ |\ |\ |\ |\ |\
confidential: |\
A. When the information concerns illegal activities on the part of
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the client |\ |\
B. When disclosure is required by law
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C. Unless client requests the information be shared with others -
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CORRECT ANSWERS ✔✔Unless client requests the information be
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shared with others |\ |\
Which of the following would result from prolific trading on
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material nonpublic information? |\ |\ |\
I. Erosion of investor confidence in investment professionals and
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institutions |\
II. Efficient allocation of information to the investing public
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III. Efficient allocation of capital to worthy investments
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A. I only
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B. II and III
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C. I, II, and III - CORRECT ANSWERS ✔✔A. I only
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For CFA Institute members who do not have advisory
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relationships with individual clients but manage investments to |\ |\ |\ |\ |\ |\ |\ |\
, an index or an expected mandate for a pooled fund, the Code
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and Standards: |\ |\
A. requires that investments be made in a manner consistent
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with the stated mandate |\ |\ |\ |\
B. require that investments be suitable for majority of individual
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investors in the investment fund |\ |\ |\ |\ |\
C. do not require a suitability assessment for the investments
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purchased for the fund - CORRECT ANSWERS ✔✔A. requires that |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
investments be made in a manner consistent with the stated |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
mandate
Communication of an investment recommendation by an |\ |\ |\ |\ |\ |\ |\
investment adviser to clients should NOT be based on: |\ |\ |\ |\ |\ |\ |\ |\ |\
A. the suitability of the investment for the client
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B. the client's expressed interest in the investment
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C. the fees paid by the client to the adviser - CORRECT ANSWERS
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✔✔C. the fees paid by the client to the adviser
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Acting with loyalty mandates that investment actions be carried
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out in the best interest of the client given the known facts and
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circumstances |\
A. True
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B. False - CORRECT ANSWERS ✔✔A. True
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Which equation represents an income statement?
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A. Assets = liabilities + stockholders' equity
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B. Cash in - cash out = net income
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|\ |\ |\ |\ |\
Which of the following best describes a CA Institute member's
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
duty under CA Institute Standard III (E): Preservation of
|\ |\ |\ |\ |\ |\ |\ |\ |\
Confidentiality? Members are required to keep client information |\ |\ |\ |\ |\ |\ |\ |\
confidential: |\
A. When the information concerns illegal activities on the part of
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
the client |\ |\
B. When disclosure is required by law
|\ |\ |\ |\ |\ |\
C. Unless client requests the information be shared with others -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT ANSWERS ✔✔Unless client requests the information be
|\ |\ |\ |\ |\ |\ |\ |\
shared with others |\ |\
Which of the following would result from prolific trading on
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
material nonpublic information? |\ |\ |\
I. Erosion of investor confidence in investment professionals and
|\ |\ |\ |\ |\ |\ |\ |\ |\
institutions |\
II. Efficient allocation of information to the investing public
|\ |\ |\ |\ |\ |\ |\ |\ |\
III. Efficient allocation of capital to worthy investments
|\ |\ |\ |\ |\ |\ |\ |\
A. I only
|\ |\ |\
B. II and III
|\ |\ |\
C. I, II, and III - CORRECT ANSWERS ✔✔A. I only
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
For CFA Institute members who do not have advisory
|\ |\ |\ |\ |\ |\ |\ |\ |\
relationships with individual clients but manage investments to |\ |\ |\ |\ |\ |\ |\ |\
, an index or an expected mandate for a pooled fund, the Code
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
and Standards: |\ |\
A. requires that investments be made in a manner consistent
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
with the stated mandate |\ |\ |\ |\
B. require that investments be suitable for majority of individual
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
investors in the investment fund |\ |\ |\ |\ |\
C. do not require a suitability assessment for the investments
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
purchased for the fund - CORRECT ANSWERS ✔✔A. requires that |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
investments be made in a manner consistent with the stated |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
mandate
Communication of an investment recommendation by an |\ |\ |\ |\ |\ |\ |\
investment adviser to clients should NOT be based on: |\ |\ |\ |\ |\ |\ |\ |\ |\
A. the suitability of the investment for the client
|\ |\ |\ |\ |\ |\ |\ |\ |\
B. the client's expressed interest in the investment
|\ |\ |\ |\ |\ |\ |\ |\
C. the fees paid by the client to the adviser - CORRECT ANSWERS
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
✔✔C. the fees paid by the client to the adviser
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
Acting with loyalty mandates that investment actions be carried
|\ |\ |\ |\ |\ |\ |\ |\ |\
out in the best interest of the client given the known facts and
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
circumstances |\
A. True
|\ |\
B. False - CORRECT ANSWERS ✔✔A. True
|\ |\ |\ |\ |\ |\
Which equation represents an income statement?
|\ |\ |\ |\ |\ |\
A. Assets = liabilities + stockholders' equity
|\ |\ |\ |\ |\ |\ |\
B. Cash in - cash out = net income
|\ |\ |\ |\ |\ |\ |\ |\ |\
