Level 1EXAM 5 Afternoon.doc

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1、Schweser Printable Tests - Level 1 - EXAM 5 Afternoon - 180 minutes - Level 1 - EXAM 5 AfternoonYou can print this page by going to file - print in your internet browser. Ethics - 18 Questions - 27 minutesQuestion: 1 - 29588 Benito Salvatore, CFA, is licensed in the established country of Oldworld b

2、ut has clients and makes investments in the emerging county of Newworld. The regulations of Oldworld prohibit licensed investment professionals from taking gifts or gratuities in any amount from vendors or persons connected with potential investments. The laws of Newworld are silent on this issue. U

3、nsolicited, Salvatore is offered a vase worth US $75 by a Newworld trust company and a bronze statue worth US $200 by a Newworld company that Salvatore is considering as a potential investment.Salvatore is: A)not permitted to accept either gift.B)permitted to accept the vase but not the statue.C)per

4、mitted to accept the statue but not the vase.D)permitted to accept both gifts.Question: 2 - 29589 Georgia Jones, CFA, is an analyst for Johnson, Thomas & Co. She also serves as an outside director for Dewey Manufacturing, Inc. In the course of her duties, she begins to believe that Deweys income sta

5、tement for the most recent period may have been misstated. Georgia should do all of the following EXCEPT: A)consult with Dewey Manufacturings legal counsel.B)consult with Johnson, Thomas legal counsel.C)refrain from voting to approve any of Deweys financial statements that include the element in que

6、stion.D)inform the Securities and Exchange Commission.Question: 3 - 29590 Bill Owens obtained his CFA charter in 1999, and began using the following letterhead:William J. Owens,* CFA*222 Main Street Bank BuildingAnywhere, USA *member, Association for Investment Management and Research*received CFA c

7、harter September 1999In 2001, Owens did not renew his membership in AIMR. Accordingly, he must modify his letterhead by doing all of the following EXCEPT:A)deleting the CFA following his name.B)deleting the reference to when he received his CFA charter.C)deleting the reference to AIMR membership.D)n

8、one; all references to AIMR and CFA must be deleted.Question: 4 - 29591 Reginald Brown, CFA, has been convicted three times in a year of misdemeanor driving while intoxicated. Browns membership in AIMR: A)because his actions reflect poorly on his professional may be terminated competence.B)may be te

9、rminated if he is convicted of a felony but not for misdemeanor convictions.C)may be terminated if the misdemeanor convictions had involved dishonesty, but not for antisocial behavior.D)may be terminated for professional violations but not for personal ones.Question: 5 - 29592 Isabella Travelli, CFA

10、, is a research analyst for Worldwide Investments in Rome, Italy. Travelli was contacted by Seaside Partners of Milan, Italy, a regional brokerage firm, about doing research on companies in the beverage industry on a contract basis.Travelli may only do the contract work: A)if Worldwide has no client

11、s in the same geographic area as Seaside.B)if Worldwide does not follow the beverage industry.C)after receiving written consent from both Worldwide and Seaside.D)if Worldwide does not follow the beverage industry.Question: 6 - 29593 James Cox, CFA, is employed in a London investment banking firm. Fi

12、rm policy states that employees must pay for their own meals and entertainment if they are invited to dine or go out socially with vendors or prospective vendors of the company. Thomas Wheelwright, a representative of a major securities information service, invites Fox out for Saturday dinner and to

13、 go to the theater. Wheelwright insists on paying for the evening.If Cox attends the events and allows Wheelwright to pay for the dinner and show Cox has violated: A)company policy but not the Code and Standards.B)company policy but not the Code and Standards as long as the firm receives full disclo

14、sure of Coxs potential conflict of interest.C)both company policy and the Code and Standards.D)neither company policy nor the Code and Standards because the social engagement was not directly related to company business.Question: 7 - 29594 Sandra Fellows, CFA, received a telephone call from one of h

15、er clients at Boston Financial offering her the free use of their vacation home on Cape Cod the following summer. The client stated that the offer was not dependent upon any level of performance, but was given in appreciation for their many years of working together.To be in compliance with the Code

16、 and Standards, Fellows: A)may accept the offer if her supervisor is informed and gives consent.B)may accept the offer because the benefit is not contingent upon performance.C)may accept the offer but must inform Boston Financial in writing that the offer was made.D)must decline the offer.Question:

17、8 - 29595 Joey Balder, CFA, was approached by the management of Flagship Investment Managers about becoming Flagships Southtown branch supervisor. Balder is reluctant to accept the position because certain compliance procedures have not been adopted in that branch.Balder should: A)discuss his concer

18、ns with management and tell them he will not accept the position unless and until he is given authority to resolve them. B)accept the position on condition that the procedures are adopted immediately.C)decline in writing to accept the supervisory position until the firm adopts appropriate procedures

19、.D)accept the position and use his best efforts to get the procedures implemented as soon as possible.Question: 9 - 29596 Susan Tateoka, CFA, prepared a research report on National Airlines. In preparing her report, Tateoka relied heavily on a statistical ranking service that placed National in the

20、top 10 percent of companies expected to outperform the market in the coming 12 months. Tateoka released the report and then proceeded to add this position to all of her portfolios, including the portfolio of Jim and June Rose, who already owned 6 airline stocks and were severely overweighted in that

21、 industry, without specially justifying this position.Tateoka has: A)violated the Code and Standards by relying heavily on a statistical ranking service and also by adding a position to a portfolio without taking into account the context of the entire portfolio.B)violated the Code and Standards by a

22、dding a position to a portfolio without taking into account the context of the entire portfolio.C)violated the Code and Standards by relying heavily on a statistical ranking service.D)not violated the Code and Standards.Question: 10 - 29597 Joshua Rosenberg, CFA, covers Northwest Implements, a farm

23、implement manufacturer, whose main factory is located in a sparsely-inhabited region six hours by automobile from the nearest airport. Northwest has its own corporate jet and a landing strip is located near the facility. When Rosenberg contacts Northwests management to gather information for a repor

24、t he is preparing on the company, Northwests chief financial officer, Thomas Blake, invites Rosenberg to visit Northwests headquarters and meet with management. Blake offers to send Northwests corporate jet to pick Rosenberg up from an airport near Rosenbergs home and to return him home the same eve

25、ning. Rosenberg estimates that it would require three days for him to make the visit using commercial travel.If Rosenberg accepts Blakes offer and makes the trip to Northwests headquarters on the corporate jet, Rosenberg: A)has not violated the Code and Standards if his trip was entirely devoted to

26、business even if Northwest pays all of the expenses of the trip.B)has not violated the Code and Standards if Rosenberg discloses the trip and the payment of his travel expenses in Rosenbergs report. C)has not violated the Code and Standards as long as he reimburses Northwest for the cost of the trip

27、. D)has violated the Code and Standards if he proceeds to write the report.Question: 11 - 29598 Alan Cramer, CFA, practices in a country that does not regulate the investment of company retirement plans. He was retained by Bingham Companies to manage their corporate pension plan. Binghams management

28、 has approached Cramer and requested that Cramer invest the entire plan in Bingham stock.Cramer may: A)invest a portion of the retirement plan in Bingham Company stock if the investment is prudent and if he keeps the overall portfolio properly diversified.B)invest all of the retirement plan assets i

29、n Bingham Company stock according to managements request only if Cramer can document that the investment is more prudent than any other investment opportunity he finds.C)immediately terminate his relationship with the plan because of the conflict of interest raised by the management contact.D)not in

30、vest any of Bingham Companys retirement plan in its own stock regardless of the stocks prospects and in spite of managements request.Question: 12 - 29599 Charmaine Townsend, CFA, has been managing a growth portfolio for her clients using a screening process that identifies companies that have high g

31、rowth rates. Townsend has decided that, because of a volatile economy, she is going to adopt a value strategy using a screening process that identifies companies that have low price-earnings multiples.Townsend will violate the Code and Standards if she makes this change in her investment process wit

32、hout: A)notifying her clients before she makes the change.B)promptly notifying her clients after she makes the change.C)getting written permission from her clients in advance of the change.D)getting prompt written acknowledgment of the change from her clients within a reasonable time after the chang

33、e was made.Question: 13 - 29600 Samuel Goldstein, CFA, is an analyst for Tamarack Securities. Goldsteins father, Reuben, has a client account at Tamarack. In ordering trades, Goldstein should place orders in: A)his clients accounts first, his fathers account second, and his account last.B)his client

34、s and his fathers accounts in the first group and his personal accounts in the second group.C)his clients accounts in the first group and his fathers and his own personal account in the second group.D)all accounts simultaneously.Question: 14 - 29601 Kevin Blank, CFA, is a representative for Campbell

35、 Advisors. In a meeting with a prospective client, the client inquired about investing in bonds denominated in Mexican Pesos. Bland assured the client that Campbell employed an expert in Mexican fixed income investing. In fact, Blank had heard a rumor that his colleague, Jon Woller, might have had e

36、xperience in fixed income investing. The following day Blank learned that Woller had, in fact, no such experience. Blank did not correct his earlier statement and the prospective client invested with Campbell.Blank has: A)violated the Code and Standards both when he represented the qualifications of

37、 his colleague and later, when he learned the truth, and failed to contact the prospective client and correct his earlier statement.B)only violated the Code and Standards when he learned that his statement was incorrect and did not contact the prospect to explain his error.C)not violated the Code an

38、d Standards because Blank did not intentionally mislead the prospect. D)not violated the Code and Standards because Blanks statements were verbal and not in writing. Question: 15 - 29602 Lisa Pierce, CFA, has been researching Lander Manufacturing, Inc. for the past three weeks. She likes the company

39、s history of fulfilling its contracts on time and within budget. She learns from the uncle of a maintenance worker at Landers headquarters that a group of well-dressed individuals arrived at headquarters in a lime green-colored limousine and then spent the day at the headquarters. Pierce knows from

40、publicly-available information that Gilbert Controls, Inc. needs a large supply of specialized motors in its domestic division. She also knows that the executive officers of Gilbert usually travel in a lime green limousine. Pierce concludes that it is very likely that Gilbert will offer a large cont

41、ract to Lander. Based on this development and her prior research Pierce would like to acquire Lander Manufacturing, Inc. shares for her client accounts.Pierce should: A)not acquire the shares until after she has contacted Landers management and encouraged them to publicly announce information about

42、the Gilbert Controls contract.B)not acquire the shares until after she has contacted Landers management and encouraged them to publicly announce information about the Gilbert Controls contract. She should also wait until Lander has made the announcement and the public has had time to react to it and

43、 then make the acquisition.C)proceed to acquire the shares.D)not acquire the shares because she possesses material nonpublic information.Question: 16 - 29603 Natalia Gregory, CFA, represents Value Advisors. She was approached by her personal physician, whose assistant had been given a paper that des

44、cribed a tender offer that Gallant was preparing to make for Calypso Company. Gregorys physician would like Gregory to purchase shares of Calypso in his personal account.Gregory should: A)not acquire the shares until she has contacted Gallants management and encouraged them to publicly announce the

45、merger discussions.B)not acquire the shares.C)not acquire the shares until she has contacted Gallants management and encouraged them to publicly announce the merger discussions. She should also wait until they have made the announcement and the public has had an opportunity to react to it.D)proceed

46、to acquire the shares because the information was neither misappropriated nor obtained in breach of a duty.Question: 17 - 29604 Donald White, CFA, a representative with Boulder Investments, has prepared composites for the fixed income and growth portfolios Boulder has managed for the last 10 years a

47、nd for a balanced portfolio that did not exist in reality but that combines actual portfolio results from the growth and fixed income portfolios.In meeting with prospects, White may present the growth and fixed income composites: A)and the balanced composite if it is fully disclosed that the balance

48、d composite is a hybrid of actual results.B)and the balanced composite if it is fully disclosed that the balanced composite is only an estimate of what actual results might have been.C)and the balanced composite.D)but not the balanced composite.Question: 18 - 29605 Elipse Investment Managers appended the following statement at the end of its performance report for the year ended December 31, 2001: