Question #10
Reading: Reading 42.3 Standards of Professional Conduct Guidance for Standards III
PDF File: Reading 42.3 Standards of Professional Conduct Guidance for Standards III.pdf
Page: 4
Status: Incorrect
Correct Answer: B
Your Answer: B
Question
Paul Salyer, a portfolio manager, is making a presentation to a prospective client. Paul says that as a new portfolio manager, he made an average annual rate of return of 50% in the last two years at his previous firm and that based on this, he can guarantee a 50% return to the client. Which of the following statements is in accordance with Standard III(D), Performance Presentation?
Answer Choices:
A. Stating his past performance as long as it is fact
B. Implying that he can guarantee a return
C. Imputing his past performance to future performance
Explanation
There is no evidence that he's lying about his past performance. He is in violation for
implying that he can guarantee performance, for using short-term performance, and for
imputing the manager's past performance to future performance.
(Module 42.6, LOS 42: III(D))