Chapter 5 Flashcards

You may prefer our related Brainscape-certified flashcards:
1
Q

Investment advisers have a fiduciary duty to act in the best interest of their clients, which includes:

A
  1. Having a reasonable and objective basis for the investment advice provided
  2. Ensuring that the investment advice is suitable
  3. Obtaining the best execution for its client’s securities
  4. Disclosing potential conflicts of interests
  5. Consulting with other professionals
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Broker-dealers recommendations versus Investment Advisers recommendations

A

Broker-dealers = suitable
IA’s = best interest

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Uniform Prudent Investor Act (UPIA)

A

-Based on Modern Portfolio Theory
-Examines trade off between risk and reward
-Analyzes portfolio as a whole
-Recognizes need for diversifcation
-Places no categorical restrictions on investments

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Soft Dollar Arrangements
Acceptable

A

An IA may pay higher commissions for trade execution in return for “soft” dollars if used to acquire services that will benefit its advisory clients

Acceptable:
1. Research reports
2. Analysis
3. Market Data
4. Seminars
5. Software used for analysis

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Soft Dollar Arrangements Unacceptable

A

1) Computer hardware
2) Telephone lines
3) Hiring personnel (salaries)
4) Rent
5) Travel, entertainment or meals

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Soft dollar arrangements need to be disclosed on?

A

Form ADV Part 2 or Brochure

How well did you know this?
1
Not at all
2
3
4
5
Perfectly