Chapter 2 Pmt

Front 1

What's the definition of ethics?

Front 2

Where no regulation exists or apply which behavioral guidance help?

Back 2

Ethical principles

Front 3

Blank space widely exposes and reports on unethical conduct, such as insider trading or the misuse of client's funds.

Back 3

Media

Front 4

What words define values?

Back 4

Morality, integrity, trust, honesty, competent

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Front 5

Individuals and corporations get into trouble when?

Back 5

When their means values do not support their end values

Front 6

The most difficult ethical dilemmas to resolve are those of?

Back 6

Right versus right

Front 7

What is the source of most ethical dilemmas that today's portfolio managers face?

Back 7

The portfolio manager places the interests of the client before their own

2.9

Front 8

Who is the ultimate fiduciary responsibility?

Back 8

Fund's board of trustees

Although for some funds:

Administrative committee,

Company's board of directors

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Front 9

Fiduciary status is based on blank space for a fund, not just on an individual title

Back 9

Functions performed

Front 10

In what document a fund must have at least one fiduciary who is an individual or entity named in it??

Back 10

Trust indenture

2.11

Front 11

Trust is expressed by way of 3 elements. what are they?

Back 11

Disclosure of information,

Influence over decisions,

exercising control

Front 12

In any meeting a discretionary portfolio manager has with prospective or current client, they must do the following

Back 12

Listen intently to what the client is saying,

Not be manipulative, exploitative or deceptive,

Admit, when they don't know something,

Perform competently,

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Front 13

The trust relationship between a discretionary portfolio manager and client is based on 2 principles, what are they?

Back 13

Competence ,

integrity

Front 14

3 elements must be present for trust based relationship to develop between portfolio manager and client, what are they?

Back 14

Portfolio manager has special knowledge that client does not have,

Portfolio manager belongs to an industry that is well regulated,

Portfolio manager places the interest of the client before their own

Front 15

As the best practice, what should an employee's first day on the job begin with?

Back 15

Compliance,

Adherence to an institutional investment manager's code of ethics

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Front 16

What is the definition of good business practice?

Back 16

Distributing the firm's code of ethics to all affected employees at least on an annual basis is a good business practice.

This practice should also include having all recipients reaffirmed in writing their commitment to code of ethics.

Front 17

Regarding personal investment activities of the institutional investment manager's staff, what are two elements of a good business practice

Back 17

Written personal trading guidelines,

Prior approval process,

Front 18

For a code of ethics to be effective, what are the necessary elements?

Back 18

Senior management must support it,

Employees must participate in development and reinforcement,

Training and reinforcement must be implemented,

Should be reviewed periodically and updated when necessary,

Front 19

Aside from firm's staff, who else should be made aware of the existence of the code of ethics?

Back 19

Clients

Front 20

The majority of institutional investment management firms have adopted to code of ethics through which entity?

Back 20

CFA cod of ethics

Front 21

What are the strengths of code of ethics?

Back 21

The company is prepared to be explicit about ethics,

It can be valuable, formal and updateable expression of appropriate behavior,

Provides a social contract for the workplace,

Supports individual and firm's responsibilities and accountabilities

Front 22

What are the weaknesses of code of ethics?

Back 22

It may lull management and regulator into a false security sense. (Gathering dust)

It deals with resolving conflicts between right and wrong, but not more complex, and between 2 rights,

It may focus on what to do without explaining why.

Deals with an employee's obligations to employer but not the employer's obligations to employee

Poorly written code may contain policies that are inconsistent with an industry philosophy and incentive strategies

Front 23

What are typical rationalizations?

Back 23

If I do not do it, somebody else will.

It does not hurt anyone,

that is the way it has always been done,

if everybody does it, then it must be OK.

Front 24

What are the common characteristics of Values?

Back 24

L, G, B

They are long lasting , but not necessarily unchangeable,

They guide individual and corporate behavior and goals

They are beliefs, not facts.

Front 25

A blank space, is one in which the ends and means mutually reinforce and support each other

Back 25

Unified Value System

Front 26

What is end value include ? (Csi question)

Back 26

Sense of accomplishment,

family security,

self respect,

social recognition,

wisdom

Front 27

What are included in means value ?

Back 27

Ambition,

Competence,

Honesty,

Independence,

Responsibility

Front 28

Prior Approval Procees for Personal Trading of a firm's staff. Which department must provide written confirmation to affected employees?

When

Back 28

Compliance

Or

Senior management personnel,

Prior to placing trades

Front 29

Fir right versus wrong, some elements of the situation provides clear guidelines.

What are they?

Back 29

One choice is clearly illegal,

One choice lacks a basis in truth,

the negative consequences of 1 particular decision will far outweigh any positive results,

the proposed action does not confirm with the code of fundamental inner values that are widely shared and understood,

Front 30

What is the definition of Ethical Dilemma?

Back 30

Exists when 2 or more of the possible choices pit different values against each other.

Pit means compete with

Front 31

What is the definition of Prudent man Rule?

Back 31

It directs the fiduciary to observe how a person of prudence, discretion and intelligence manages their own affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, while considering the probable income, as well as the probable safety, of the capital to be invested.

Front 32

What can cause the loss of professional designations and regulatory licenses for both the staff and the firm?

Back 32

Firm's inability to conduct its affairs with its own code of ethics

Front 33

A fund's, blank space, has the ultimate fiduciary responsibility

Back 33

Board of trustees

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