I see that CFAI added some chapters to the ethics part from L1 such as soft dollars etc. Are they worth spending time on, or L1 ethics material is enough which I had read couple of times… though in November. Thanks
read it again everything
yes, definitely understand the old prudent man rule vs new prudent investor as well as the soft dollar standards. old prudent man - investment decisions based on preservation of capital, not risk/reward; trustee can’t appoint someone else to make investment decisions; entire types of investments excluded from portfolio (IPOs, options); investment decisions made in context of individual investment. new prudent investor - takes into account modern portfolio theory; allows trustee to appoint someone else to make investment decisions if current trustee doesn’t have necessary expertise; allows any type of investment, as long as it fits into the risk/return profile of the investment objectives; investment decisions made in context of entire portfolio; current income should be balanced against growth; diversification as a method to reduce risk is expected to be used. the similarities between the two are the loyalty and impartiality standards. anything i’m missing?
Definitely spend time on the “new” Ethics material, last year there must have been over 6 questions (out of 12) that related to Soft Dollars, Prudent Man and Prudent Investor and also Research Objectivity Standards(VERY NB) So yeah, it’s definitely worth spending time on.
in the above, who is the trustee exactly?