Question #46 - Reading 42.3 Standards of Professional Conduct Guidance for Standards III

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: 19

Status: Incorrect

Correct Answer: A

Your Answer: B

Question

Ed Staples, CFA, manages a pension fund sponsored by Hill Corporation. The Code and Standards most likely require Staples to:

Answer Choices:

A. act solely in the interest of the ultimate beneficiaries

B. support the sponsor's management during proxy fights

C. base investment decisions on each beneficiary’s return requirements and risk tolerance

Explanation

Standard III(A) Loyalty, Prudence, and Care requires members and candidates who manage investment funds to act in the interest of the beneficiaries. However, the Standard states that fund managers' investment decisions are not required to be based on the investment needs of each fund investor, but rather should benefit the investors as a whole. In voting proxies, the beneficiaries' interest must prevail over management's interest. (Module 42.4, LOS 42: III(A))

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