Here are some questions guys, I send the answers about little bit of brain Storming: Steve Phillips is the new director of equity research for a brokerage company. He receives a call from a reporter at the Financial News, a weekly publication that comes out on Mondays. The reporter explains the relationship she had with his predecessor. They would share information that they both learned on stocks—the former director would benefit the company’s clients by news he obtained from the reporter in exchange for information he gave to her. The former director could ask her not to publish any information he gave her until after a certain date, ensuring that the brokerage clients would be informed before the publication date. After the conversation, Phillips called the former director, who confirmed that the reporter was trustworthy with respect to honoring the agreement for delaying publication until clients have been informed. Philips should: A) only disclose research that has already been disseminated to clients, as long as the reporter is providing valuable information of her own. B) disclose research not yet disclosed to clients, as long as the reporter promises not to publish the information until after all clients have received the research, and the reporter provides valuable information of her own. C) disclose only research that he is sure will be disseminated to clients before the next publication date of the Financial News in exchange for the reporter providing valuable information of her own. D) not disclose any research even after it has been disseminated to clients regardless of the value of the information that the reporter may have. Sue Parsons, CFA, works full-time as an investment advisor for the Malloy Group, an asset management firm. To help pay for her children’s college expenses, Parsons wants to engage in independent practice in which she would advise individual clients on their portfolios. She would conduct these investment activities only on weekends. Which of the following statements about Standard IV(A), Loyalty to Employer, is most accurate? Standard IV(A): A) does not require Parsons to notify Malloy of preparing to undertake independent practice under the current conditions. B) precludes Parsons from entering into an independent competitive activity while still employed by Malloy. C) requires Parsons to notify Malloy in writing about her intention to undertake an independent practice. D) requires Parsons to obtain written consent from both Malloy and the persons from whom she undertakes independent practice. Holding other factors constant, the interest rate risk of a coupon bond is higher when the bond’s: A) yield to maturity is lower. B) term to maturity is lower. C) coupon rate is higher. D) current yield is higher.
A D B (Not sure as it is been a while I did FI)
D. The director ideally should not get involved in any such collusive contracts (even if it is for the benifit of the clients…), since it’s unethical, but don’t know what standards of Professional Condust have to say about it. D. the job is not going to take too much of his current employeers committed time (since the independent service he is willing to take up is a Weekend based service), also it’s involves some form of monetary-compensation (since they have talked of repaying children’s fees) and finally it’s in direct competion to his current employeer (Advisory)… So he has to get a written consent sanctioned from all the involved parties… D. just guessing on this… probably since CY = yearly interest/ market price so when IR is high, market price is low and CY is high… - Dinesh S
B D A
D D A
D B A
Holding other factors constant, the interest rate risk of a coupon bond is higher when the bond’s: A) yield to maturity is lower. B) term to maturity is lower. C) coupon rate is higher. D) current yield is higher. Three L formula Long maturity, Low Coupon, Low Yield
Guys here are the answers. cpk123, I like your 3 L formula. Steve Phillips is the new director of equity research for a brokerage company. He receives a call from a reporter at the Financial News, a weekly publication that comes out on Mondays. The reporter explains the relationship she had with his predecessor. They would share information that they both learned on stocks—the former director would benefit the company’s clients by news he obtained from the reporter in exchange for information he gave to her. The former director could ask her not to publish any information he gave her until after a certain date, ensuring that the brokerage clients would be informed before the publication date. After the conversation, Phillips called the former director, who confirmed that the reporter was trustworthy with respect to honoring the agreement for delaying publication until clients have been informed. Philips should: A) only disclose research that has already been disseminated to clients, as long as the reporter is providing valuable information of her own. B) disclose research not yet disclosed to clients, as long as the reporter promises not to publish the information until after all clients have received the research, and the reporter provides valuable information of her own. C) disclose only research that he is sure will be disseminated to clients before the next publication date of the Financial News in exchange for the reporter providing valuable information of her own. D) not disclose any research even after it has been disseminated to clients regardless of the value of the information that the reporter may have. The correct answer was A. In no case should information be disclosed to a reporter before all clients are provided with the research—doing so will violate the Standard on fair dealing. However, once clients have been informed, there is no violation in releasing the information to the reporter, and in doing so Phillips might obtain information that can further help his clients. ====================================== Sue Parsons, CFA, works full-time as an investment advisor for the Malloy Group, an asset management firm. To help pay for her children’s college expenses, Parsons wants to engage in independent practice in which she would advise individual clients on their portfolios. She would conduct these investment activities only on weekends. Which of the following statements about Standard IV(A), Loyalty to Employer, is most accurate? Standard IV(A): A) does not require Parsons to notify Malloy of preparing to undertake independent practice under the current conditions. B) precludes Parsons from entering into an independent competitive activity while still employed by Malloy. C) requires Parsons to notify Malloy in writing about her intention to undertake an independent practice. D) requires Parsons to obtain written consent from both Malloy and the persons from whom she undertakes independent practice. The correct answer was A. Standard IV(A), Loyalty to Employer, requires that Parsons obtain written consent only from her employer before she undertakes independent practice that could result in compensation or other benefit in competition with Malloy. It is not required to get permission from your employer when only preparing to go into independent practice. ====================================== Holding other factors constant, the interest rate risk of a coupon bond is higher when the bond’s: A) yield to maturity is lower. B) term to maturity is lower. C) coupon rate is higher. D) current yield is higher. The correct answer was A. There are three features that determine the magnitude of the bond price volatility: 1. The lower the coupon, the greater the bond price volatility. 2. The longer the term to maturity, the greater the price volatility. 3. The lower the initial yield, the greater the price volatility. In this case the only determinant that will cause a higher interest rate risk is having a low yield to maturity (initial yield). A higher coupon yield, a higher current yield, and a lower term to maturity will cause for lower interest rate risk. ======================================
Sue Parsons, CFA, works full-time as an investment advisor for the Malloy Group, an asset management firm. To help pay for her children’s college expenses, Parsons wants to engage in independent practice in which she would advise individual clients on their portfolios. She would conduct these investment activities only on weekends. Which of the following statements about Standard IV(A), Loyalty to Employer, is most accurate? Standard IV(A): A) does not require Parsons to notify Malloy of preparing to undertake independent practice under the current conditions. B) precludes Parsons from entering into an independent competitive activity while still employed by Malloy. C) requires Parsons to notify Malloy in writing about her intention to undertake an independent practice. D) requires Parsons to obtain written consent from both Malloy and the persons from whom she undertakes independent practice. The correct answer was A. Standard IV(A), Loyalty to Employer, requires that Parsons obtain written consent only from her employer before she undertakes independent practice that could result in compensation or other benefit in competition with Malloy. It is not required to get permission from your employer when only preparing to go into independent practice. ====================================== But nowhere in the question, it was mentioned that she is in preparation. In the absense of “preparation” the answer “D” seems ok. Otherwise, it seems “A” & “D” are both technically right !