SECTION 6.2.2. LO.F. COPYRIGHT © IFT. ALL RIGHTS RESERVED. PAGE 3 COPY...

11. C is correct. The portfolio manager should always ensure compliance to the CFA Institute Code of Ethics and Standards of Professional Conduct. Hence educate the client when a conflict arises. Section 9. LO.g. Set 2 Questions The following information relates to questions 1 – 5. Carla John and Sima Rose are Separately Managed Accounts (SMA) managers at Carlington Investments. They are discussing the investment portfolio and investment policy for a client, Julia Bart. John and Rose differ in their opinions regarding the preparation of an Investment Policy Statement. John states, "Investment policy should be standardized for all clients. We can make four different standard policy statements and let our clients choose from these instead of spending time preparing a policy statement for each client." Sima states, "It's not prudent to develop a long-term investment policy as market conditions change constantly. It is therefore better that the portfolio manager has the freedom to react to changing conditions." Bart is in her early thirties and intends to maintain an investment portfolio till her retirement. She has a large asset base comprising of real estate, stocks and bonds. The value of her assets stands at $50 million. She currently receives an investment income from her portfolio and earns a fixed salary as head of the marketing department of a large consumer goods manufacturer. Bart expects to retire in thirty years. Her income is enough to meet her living expenses. She is unmarried and has no children. Her parents live abroad and run a family business. In her meeting with Carlignton’s account managers, Julia has mentioned that she would not like to take excessive risk.