Government regulation of charitable organizations and public pension plans:

The Prudent Man Rule, as it was originally written, was clearly oriented towards ________.

When an investment manager uses client brokerage to purchase research services that benefit the investment manager; this is known as ________.

Although trade-date accounting is recommended, ________ accounting that is disclosed is acceptable for calculating performance.

Standard V (B) addresses any practice that would lead to misrepresentation of a member's record, whether the practice involves performance ________ or performance ________.

Standard III (A) - Obligation to Inform Employer of Code & Standards - requires all AIMR members, Charterholders and CFA candidates inform their employers about their personal obligation to abide by the code. Which of the following is/are true in regard to this requirement?
I. The notification can be in either oral form or in writing, either in print, handwriting or by electronic means like email.
II. Notification is necessary even if the employer is publicly known to have adopted the Code of Ethics.
III. For compliance with Standard III (A), notification must be made to the immediate employer and not necessarily senior management.

Which of the following AIMR Standards states that the financial analyst shall distinguish between facts and opinions in research reports?

The AIMR Performance Presentation Standards require that firms report, at a minimum, ________ years of performance to claim compliance with the standards.

According to Standard IV (B.4), Priority of Transactions, ________ is recommended when a manager has purchased a security in violation of trading policy.

Which of the following AIMR Standards states that the financial analyst must exercise diligence and thoroughness in making investment recommendations or taking investment actions?

Standard II includes rules on which of the following?

According to the AIMR-PPS when presenting the performance record of composites containing portfolios that use leverage, which of the following statements are true?

Which of the following can be found in Standard II?

Standard IV (B.5) deals with ________.

Which of the following can be found in Standard I?

Which of the following AIMR standards states that a member shall not knowingly participate, or assist, in any violation of applicable laws, regulations, or the Code and Standards?

Which of the following rules apply for calculations under the Performance Presentation Standards?

Xuanchi Zuan is a successful portfolio manager with Up & Away, a money management fund that operates strongly bullish funds. One of Zuan's clients, Margo
Margolis, is about to retire in a couple of years. Margo has been phasing out her risky investments over the past five years, moving them into longterm treasury bonds. However, she recently read in a financial magazine the attractiveness of investing in emerging markets. She was especially enticed by the 30% and 40% annual returns observed in these markets over the past 2-3 years. She approaches Zuan and instructs him to move 30% of her funds into these markets. Zuan should:

Which of the following can be found in Standard I?

Which of the following AIMR standards pertains to the responsibilities of supervisors?

Since return results must be calculated on a basis that includes the effect of leverage, return results must be restated to a(n) ________ basis.

Which of the following can be found in Standard III?

Firms with records or performance calculations for periods prior to the applicable effective date(s) that are not in conformance with the AIMR Performance Presentation Standards can still claim compliance with the standards if certain conditions are met. Which of the following is an option available to such a firm?

Which of the following can be found in Standard II?

Standard II (A) deals with ________.

Standard IV (B.5), Preservation of Confidentiality states:

When a manager is responsible for the portfolios of pension plans or trusts, the duty of loyalty is owed to the ________.

According to the Prudent Investor Rule, the trustee must:
- adhere to loyalty, impartiality and ________
- maintain overall portfolio risk at a reasonable level
- provide for reasonable diversification of trust investments
- act with prudence in deciding whether and how to delegate authority to experts and in selecting and supervising agents
- be cost conscious when investing

Jorgenson is a senior bond analyst with Morgan Co., a large investment banking firm. Over the past quarter, Morgan's corporate bond department has been betting on the credit spreads in the market narrowing and in anticipation, has invested a large amount of capital in the bonds of two firms, High Tech and
Amerizone.com. Unfortunately, the credit spreads have not displayed much activity and as the quarter end is approaching, the department wants to unload the bonds. For this, it puts pressure on Jorgenson to push the bonds on some of his larger clients. Jorgenson believes that both the bonds are good investments since
High tech and Amerizone have been doing very well and their prospects look rosy. So he goes ahead and convinces his clients to purchase as much as a third of
Morgan's bond holdings in these companies. Morgan has

Emmy Noether is a senior division manager at Harding & Harding, a money management firm. Emmy is quite fastidious about following the rules of the investment industry and has established specific procedures and guidelines designed to prevent any violations. Recently, it surfaced that one of the employees reporting to
Emmy, William Bathwater, had been secretly using inside information on a computer maker to generate profits in his portfolio. William had been extremely clever at hiding these profits and only a serendipitous audit by the Compliance Department revealed the pattern. Emmy, in her capacity as William's supervisor, has:

Mirabelle is an experienced analyst who has worked for the investment research arm of Clifford & Clifford, Inc. for the past 7 years. Recently, TransOmega retained Clifford & Clifford to conduct a study on possible takeover candidates in the aviation industry. Mirabelle has been given the project and two assistants to conduct the research. During their review, Mirabelle's assistants located a research report created recently by Donaldson, a freelance analyst. Mirabelle found the report thorough, though she did not agree with many of Donaldson's conclusions. She carried out further inquiry along those lines and modified the report with new conclusions. She showed the completed report, with proper attributions to Donaldson in places where she had used his results, to a senior partner, John Cliff of
Clifford & Clifford. The report was approved and released to TransOmega. In this case,

According to the AIMR-PPS when presenting results, annual returns for all years must be presented. Performance for periods of less than one year

Level I verification requires independent attestation that the requirements of the AIMR-PPS have been met on a(n) ________ basis.

Susan Jackson, with HRS Investments, is appearing in court as an expert witness. She will have to use research done at HRS, to which she did not contribute directly, during her testimony. Which of the following is true, in relation to Jackson's need to comply with Standard II (C)?

Under AIMR Rules of Procedure for the Proceeding Related to Professional Conduct, membership in AIMR and/or the right to hold and to use the CFA designation may be summarily suspended by AIMR's Designated Officer for the following misconduct:
I. Conviction for a crime that is defined as a felony or its equivalent.
II. Indefinite bar from registration under the securities laws (even though reapplication may be made after a specific period of time).
III. Failure to complete and return a professional conduct statement for each of two successive years.

Which of the following AIMR Standards states that additional compensation agreements must be disclosed to the employer?

Smith, a research analyst with a brokerage firm, decides to change his recommendation on the common stock of Green company, Inc., from a buy to a sell. He mails this change in investment advice to all the firm's clients on Wednesday. The day after the mailing, a client calls with a buy for 500 shares of Green Company.
In this circumstance, Smith should:

Willier is the research analyst responsible for following Company X. All the information he has accumulated and documented suggest that the outlook for the firm's new products is poor, so the stock should be rated a weak hold. During lunch, however, Willier overhears a financial analyst from another firm offer opinions that conflict with Willier's forecasts and expectations. Upon returning to his office, Willier releases a strong buy recommendation to the public. Willier:

Arbaaz, an AIMR member, works for an investment advisory firm, Leon Investments. His friend, Shahzad, recently asked him for some investment recommendations. Arbaaz analyzed Shahzad's portfolio over a weekend and suggested some changes. While he did not accept any remuneration, Shahzad promised him some gifts if his portfolio "performed well." Arbaaz did not inform his employer since he thought he was helping a friend and in any case, the
Shahzad's account was extremely small and there were no financial payments. Arbaaz has:

Which of the following AIMR Standards states that client transactions must have priority over transactions in which the analyst is a beneficial owner?

In order to inform your employer that as a member of AIMR, you must abide by the code of ethics, you must:

"Restricted Periods" are discussed in Standard IV (B.4), Priority of Transactions. Another name for restricted periods is ________ periods.

Standard II (C) deals with ________.

If a firm uses discretionary leverage, it must present performance using:

Which of the following are considered basic characteristics of a security and must be included in research reports?

Each of the following is true regarding Standard II (A), except:

Social investments:

Fundamental Responsibilities is dealt with under:

Another name for "covered" person is ________.

According to Standard IV (A.2), members should consider including the following information in research reports, except:

The disclosures for retroactive compliance apply to composites formulated prior to ________.

Andy Pilling is a bond trading specialist who recently started a special fund, the "Structured Bond Fund." The strategy behind this fund is quite complex, involving a mix of highly speculative, high-yield bonds and various tax-free municipal bonds for some stability. Andy has a strong view that the economy will remain vibrant and bullish over the next two years and hence, is not worried about the risky bonds. Assuming a falling rate scenario in this case allows the fund to project an expected return 130 basis points above the S&P 500 return. In his special report, Pilling does not disclose such assumptions nor does he reveal any details about the bond strategy. He does analyze the state of the economy and the future outlook in the report. Based on his reputation and his association with some big name academics, Pilling is able to obtain capital of close to 75 million dollars on this fund alone. Andy has:

With regard to real estate, all properties must be included in at least one ________.

________ establishes the fiduciary principles for U.S. corporate pension plans.

According to the AIMR-PPS, terminated portfolios are included in the composite for how long after termination?

Which of the following statements clearly conflicts with the recommended procedures for compliance presented in AIMR's Standards of Practice Handbook?

Which of the following relating to compliance procedures for complying with Standard III (E) is false? The compliance procedures should:

________ and other hybrid securities must be treated consistently across and within composites.

Standard IV (B.7) deals with ________.

Maria Golino is a financially savvy client of Hector Gomez, a portfolio manager with a small investment firm. Maria recently directed Hector to execute all trades on her behalf with Omega Brokerage. Omega charges higher commissions than most other brokerage firms but in this case, has agreed to provide research to Hector on behalf of Maria. Hector does not object to this and starts directing Maria's trades to Omega. Hector has

Standard ________ pertains to fair dealing with customers and clients.

Under what conditions is Standard II (B)- Professional Misconduct violated?
I. The member is convicted of a misdemeanor.
II. The member regularly engages in unprofessional but legal behavior.
III. The member engages in dishonest activities that do not result in criminal conviction.
IV. The member is convicted of a felony.

If a firm uses non-discretionary leverage, it must present performance using:

Standard III (D) deals with ________.

Which of the following can be found in Standard IV?

Standard IV of the Standards of Professional Conduct deals with Relationships with and Responsibilities to ________.

Edward Witten works for Princeton Investments and has registered to take Level III exam next year. He had taken the Level III exam 3 years ago but was not successful. In his firm's promotional material, he has stated that he is a candidate in the CFA program and has successfully passed Level II. Edward has:

Which of the following AIMR Standards states that referral fees must be disclosed in writing to clients or customers?

Standard IV (B.8), Disclosure of Referral Fees, includes ________.

Another name for "access" person is ________.

According to the AIMR-PPS for venture and private placements, ________ internal rate of return must be presented since inception of the fund and be net of fees, expenses and carry to the limited partner.

According to the AIMR-PPS, ________ are defined to include all discretionary and nondiscretionary assets.

Joan, an investment counselor, states in her firm's written promotional material that she is a CFA candidate. She has indeed enrolled in the program, but failed Level I five years ago, has not taken any exams since and is not enrolled in the next exam. Which of the following statements is correct?

Relationships with and Responsibilities to the Investing Public are dealt with under:

The ultimate responsibility to ensure compliance with code rests with: