1.) Given the board's intended purpose for starting the Fund, which of the following
principles of conduct under the Asset Manager Code of Professional Conduct is least
likely violated?
A. Act in a professional and ethical manner at all times.
B. Uphold the rules governing capital markets.
C. Act for the benefit of clients.
Answer = B
"Asset Manager Code of Professional Conduct," Kurt Schacht, Jonathan J. Stokes, and
Glenn Doggett
General Principles of Conduct: 1, 2, and 6
The board gave instructions to Akinyi to ensure compliance with capital markets
regulations, thus upholding one of the general principles of conduct of the Asset
Manager Code. But the desire for the Fund to act as a buyer of last resort violates the
principle of acting for the benefit of clients (i.e., placing their interests before the firm's
and their own). By putting the firm's interests in front of their clients, the board is not
acting in a professional and ethical manner. Although the Fund may benefit corporate
finance clients and meet the demand of some clients for a fund, not all Fund clients'
interests may be protected by the Fund being the buyer of last resort (i.e., guaranteeing
to buy 100% of the corporate finance clients' private placements if placement to other
potential investors does not succeed). These placements may not meet the Fund's
objectives and risk profile, thus not protecting the interests of the Fund's clients.
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