Level III SS 1 2 item set quiz 1 solution

Level III SS & Item Set Quiz Solution (6 questions, 18 minutes) A is correct Since her business activity of designing clothes is not related to her investing activities at Global Assets, it does not pose any conflict of interest Hence, such a business activity need not be disclosed to her employer and clients A is correct Standard III (C) Suitability does not appear to have been violated because the fund is characterized as a high-risk risk investment and it is clearly stated that MiraclePro is also a high highrisk investment Jane’s statement that the fund benefited from the doubling of market capitalization for MiraclePro last year is a violation of Standard I (C) Misrepresentation because the fund had only recently invested in the stock so did not benefit from the large move in the stock’s price Standard II (A) Material Nonpublic Information has also been violated by the board member who shared material nonpublic information with the fund and by the fund because it acted on the information C is correct The commission arrangement with OneLife is acceptable but needs to be disclosed C is correct Standard IV (B) Addition Compensation Arrangements is not violated Holding a competition to encourage sales is unlikely to cause a conflict of interest with the employer’s interests In order to win the award, sales representatives representatives might be too eager to sell and could lose sight of what is best for the customer Hence, Standard III (A) Loyalty, Prudence and Care and Standard III (C) Suitability might be violated C is correct The fund management business will comply with the the Code if it makes full disclosure to clients regarding any possible conflicts of interest B is correct because the Code calls for the Manager to maximize client portfolio value by seeking best execution for all client transactions If trades only go through through one stockbroker, best execution cannot be assured Copyright © IFT All rights reserved www.ift.world Page