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NEW QUESTION: 1
Susan Foley, CFA, is Chief Investment Officer of Federated Investment Management Co. (FIMCO), a large investment management firm that includes a family of mutual funds as well as individually managed accounts. The individually managed accounts include individuals, personal trusts, and employee benefit plans. In the past few months, Foley has encountered a couple of problems.
The Tasty IPO
Most portfolio managers of FIMCO have not participated in the initial public offering (IPO) market in recent years. However, recent changes to the compensation calculation at FIMCO have tied manager bonuses to portfolio performance. The changes were outlined in a letter that was sent out to clients and prospects shortly before the new bonus structure took effect. Carl Lee, CFA, is one portfolio manager who believes that investing in IPOs may add to his client's equity performance and, in turn, increase his bonus. While Lee's individual clients have done quite well this year, his employee benefit plans have suffered as a result of limited exposure to the strongest performing sector of the market. Lee has placed an order for all employee benefit plans to receive an allocation of the Tasty Doughnut IPO. Tasty is an over-subscribed IPO that Lee knew would make money for his clients. When he placed the order, Lee's assistant reminded him that one pension plan. Ultra Airlines, was explicitly prohibited from investing in IPOs in its investment policy statement, due to the under-funded status of the pension plan. Lee responded that the Tasty IPO would never actually be owned in Ultra's account, because he would sell the IPO stock before the end of the day and realize a profit before the position ever hit the books.
Another manager, Franz Mason, CFA, who manages accounts for about 150 individuals, is also interested in the Tasty IPO. Mason visits Lee's portfolio assistant and quizzes him about Lee's participation in the Tasty deal. Mason is sure that Lee would not have bought into Tasty unless he had done his homework.
Mason places an order for 10,000 shares of the IPO. Mason returns to his desk and begins to allocate the IPO shares among his clients. Mason divides his client base into two groups: clients who are income- oriented and clients who arc capital gains-oriented. Mason believes those clients that are income-oriented are fairly risk averse and could not replace lost capital if the Tasty Doughnut deal lost money. Mason believes the capital gains-oriented accounts arc better able to withstand the potential loss associated with the Tasty IPO. Accordingly, Mason allocates his 10,000 share order of the Tasty IPO strictly to his capital appreciation clients using a pro rata allocation based on the size of the assets under management in each account.
FIMCO Income Fund (FIF)
Over the past three years, the FIF, with $5 billion in assets, has been the company's best performing mutual fund. Jane Ryan, CFA, managed the FIF for seven years, but resigned one year ago to start her own hedge fund. Under Ryan, the FIF invested in large cap stocks with reliable dividends. The fund's prospectus specifies that FIF will invest only in stocks that have paid a dividend for at least two quarters, and have a market capitalization in excess of $2.5 billion. Foley appointed FIMCO's next best manager (based on 5-year performance numbers) Steve Parsons, CFA, to replace Ryan. Parsons had been a very successful manager of the FIMCO Opportunity Fund, which specialized in small capitalization stocks. Six months after Parsons took over the helm at FIF. the portfolio had changed. The average market capitalization of FIF's holdings was $12.8 billion, as opposed to $21 billion a year ago. Over the same period, the average dividend yield on the portfolio had fallen from 3.8% to 3.1%. The performance of the FIF lagged its peer group for the first time in three years. In response to the lagging performance, Parsons purchased five stocks six months ago. Parsons bought all five stocks, none of which paid a dividend at the time of purchase, in anticipation that each company was likely to initiate dividends in the near future. So far, four of the stocks have initiated dividend payments, and their performance has benefited as a result.
The fifth stock did not initiate a dividend, and Parsons sold the position last week. Largely due to the addition of the five new stocks, the FIF's performance has led its peer group over the past six months.
Before leaving FIMCO, Ryan had told Foley that above-average returns from both the management and client side could be gained from entering into the risk-arbitrage hedge fund market. Ryan had tried to convince FIMCO management to enter the risk-arbitrage market, but the firm determined that no one had the experience or research capability to run a risk-arbitrage operation. As a result, Ryan started the Plasma Fund LLC one month after leaving FIMCO. Foley remembers seeing Ryan at the annual FIMCO client dinner parly (before she left the firm) discussing the profits to be made from risk-arbitrage investing with several large FIF shareholders. Ryan mentioned that she would be opening the Plasma Fund to these FIMCO clients, several of whom made substantial investments in the first months of Plasma Fund's life.
After Ryan resigned and left her office, Foley performed an inventory of firm assets signed out to Ryan.
One of the copies of the proprietary stock selection software packages, FIMCO-SelectStock, assigned to Ryan was missing along with several of the SelectStock operating manuals. When Foley contacts Ryan about the missing software and manuals, Ryan states that the reason she took the SelectStock software was that it was an out of date version that FIMCO's information technology staff had urged all managers to discard.
Which of the following statements is most accurate with regard to Ryan's discussion of the new Plasma Fund with FIMCO clients?
A. Ryan is within the CFA Institute Standards because the Plasma Fund was only in the planning stages at the time of her discussion.
B. Ryan has violated CFA Institute Standard IV(A) - Duties to Employers - Loyalty. In the meeting with potential clients, even though FIMCO had no experience or research capability to enter the risk arbitrage market, Ryan is offering an asset management service that is directing funds away from FIMCO.
C. Ryan is within the CFA Institute Standards by discussing Plasma with the clients, since the product she was discussing did not compete with her present employer (FIMCO) in any way.
Answer: B
Explanation:
Explanation/Reference:
Explanation:
Standard IV(A). By soliciting potential clients while still being an employee of FIMCO, Ryan has violated Standard IV(A) Duties to Employers - Loyalty, which states (hat in matters related to their employment, members and candidates must act for the benefit of their employer and not deprive their employer of the advantage of their skills and abilities, divulge confidential information, or otherwise cause harm to their employer. The standard applies regardless of whether Ryan is on her own time. Even though FIMCO does not have a risk arbitrage product and FIMCO had actually decided against going into the risk arbitrage business, Ryan is offering a service (asset management) that is in competition with her employers business and will direct funds away from FIMCO. (Study Session 1, LOS 2.a)

NEW QUESTION: 2
Roles can be defined at which levels?
A. Iteration and release
B. project and timelines
C. team area and timelines
D. project and team area
Answer: D

NEW QUESTION: 3
A customer wants to monitor the power load per server and control power balance on the data center level for HP Proliant Gen8 servers.
Which component should you recommend?
A. Unmetered PDU
B. Monitored PDU
C. iPDU core Only
D. iPDU + Extension bars
Answer: D

NEW QUESTION: 4
ガバナンスの開発に取締役の大企業の取締役会を支援する場合、以下のどれが情報セキュリティ管理の主な機能ですか？
A. バランススコアカードの開発
B. セキュリティ予算の準備
C. アドバイスとガイダンスの提供
D. 上級管理職のコミットメントの獲得
Answer: C

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