Lecture 4 & 5 Flashcards

1
Q

Code

A

Set of rules that professionals are expected to follow but it doesn’t explain how it should be done

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2
Q

Standard

A

Set of technical definitions, specifications, and guidelines that outline the behavior and it gives you instructions

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3
Q

Laws

A

Set of rules of behavior that are enforced through legislation

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4
Q

Accredited Investor

A

Individual who alone or with spouse owns financial assets with realizable value before taxes net of liabilities exceeds 1mil

or

Individual whose net income before taxes exceeded 200,000 in each of the two most recent calendar years or whose net income before taxes with spouses exceeds 300k

or

alone or with spouse has minimum 5m in assets

or

a person has net assets of at least 5m as shown on financial statements

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5
Q

Nominal Gift

A

Anything that could affect your independence or objectivity is not considered to be nominal

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6
Q

Standard 2

A

Integrity of Capital Markets

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7
Q

Standard 2(A)

A

Material Non Public Information

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8
Q

What is Material Non Public Information

A

Basically, an individual that possesses non public information (information that can affect stock price) must not act or cause others to act on that

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9
Q

Mosaic Theory

A

Involves collecting public, non-public, and non-material information about a company to determine the value the securities and to enable the analyst to make recommendations to clients based on that information

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10
Q

Standard 2(B)

A

Market Manipulation

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11
Q

What is Market Manipulation?

A

Practice of distorting prices or inflating trading volume

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12
Q

Pump and Dump

A

Scheme where stock is artificially increased by using false statements, and then the scheme holders will sell their shares

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13
Q

Front Running

A

Broker trading a security for their own portfolio or “special” client based on info given from analyst department before any client obtains it

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14
Q

Cherry Picking

A

Strategy when investment manager chooses to show only those funds/years that have above average performance when promoting their performance record

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15
Q

Tipping

A

Providing material non public information about a public company to someone that isn’t authorized to have this info

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16
Q

Standard 3

A

Duties to Client

17
Q

Standard 3(A)

A

Loyalty, Prudence, and Care

18
Q

Loyalty, Prudence, and Care meaning?

A

Must act for the benefit of the client and place the client’s interests above your employer

19
Q

Custodial Account

A

Control the clients assets

20
Q

Trust Accounts

A

E.g., savings

21
Q

Escrow Account

A

Used for certain purpose

22
Q

Discretionary Accounts

A

Ability to act on behalf of client without permission

23
Q

Non Discretionary Account

A

Need client’s permission to act

24
Q

Standard 3(B)

A

Fair Dealings

25
Q

Fair Dealings

A

All clients must be treated fairly without any favoritism being present.

26
Q

Standard 3(C)

A

Suitability

27
Q

Suitability meaning

A

Must understand clients goals and objectives so see what’s suitable for them

28
Q

Standard 3 (D)

A

Performance Presentations

29
Q

Performance Presentations meaning

A

Must include full and complete disclosure

30
Q

Individuals are allowed to ignore the negative values of a security when presenting it to a client

True or False?

A

False, must explain both features

31
Q

Performance data must not be more than ____ days old

A

45

32
Q

Mutual fund returns should be since ________ if not available then a minimum of _ years

A

inception, 5

33
Q

Standard 3(E)

A

Preservation of Confidentiality

34
Q

Preservation of Confidentiality meaning

A

Members and candidates must keep information about current, former, and prospective clients confidential unless illegal activities are involved, disclosure required by the law, client permits disclosure