Questions about mock exam

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lawbringer

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Another long list of questions:
For the 1st Case
Q1 Why don’t we choose C?
Shao did not disclose the fees paid to the custodian bank. I think he should do that.
Q2 Why don’t we choose D?
Simulated performance is not allowed, right?
2nd Case
Q8 The answer told us the work experience was the benefit to the poor Jaeger. Does that mean if you have a job, you always have the benefit?
3rd Case
Q16 What is the value of a swap? From this question, the value is the value of receive-fixed position. However, from Sample Exam Q23, the value is the value of pay-fixed position. I am soooooo confused. Any guideline?
8th Case
Q51 This time, we help a client to change his/her cash exposure to bond. While doing the calculation, I did not find the duration of the cash, thus we use zero. However, when should we use the cash duration?
10th Case – GIPS
Q58 The answer is fine. However, from the code, we need to present return both gross of fee and net of fee, right?
Thanks in advance
 
Simulated portfolios aren’t allowed in GIPS
MV is in terms of long side of swap. Long side of swap is pay fix/rec float. Galaxy is long the swap and the swap has positive value, hence Galaxy faces credit risk.
 
simulated portfolios aren’t a violation as long as its disclosed thats its simulated
 
THe swap bit really confused me. It stated he was long the swap. However, he had bought a floating rate note and wanted to convert to fixed so I’d assume that he has to go short a swap (i.e. pay floating received fixed) to convert this to fixed rate. That suggests be is short the swap. I could understand if he had issued a floating rate note but the question clearly said he’s bought it…..anyone explain how a long swap converts from floating to fixed in this case??
 
ethics:
1. Can you use hedge funds in conservative client portfolios? i said yes (prudent investor rule)
2. Can the Advisor recommend a new inhouse fund that is run by two promoted stud analysts that he thinks highly of? I said no because part of his criteria is manager tenure and fund track record.
3. What exactly can you do while you are still with your employer but plan on leaving?
*encorporate your new firm outside of business hours ( i said yes)
*solicit potential clients that are not the firm’s clients outside of business hours (this wasn’t on there but i’m curious)
 
lawbringer Wrote:
——————————————————-
> For the 1st Case
> Q1 Why don’t we choose C?
> Shao did not disclose the fees paid to the
> custodian bank. I think he should do that.
custodial fees are normally paid “separately” to the custodian and is the cost “absorbed” by the investment firm so does not need to disclosed to client. But of course you can imagine that this custodial fee is indirectly covered by the management fee.
> Q2 Why don’t we choose D?
> Simulated performance is not allowed, right?
Dunno and I think simulated performance is not banned — so long as as fact is differentiated from opinion. The statement is simply mentioning a fact so that’s why I think it just can’t be wrong. This is as factual as “I have passed all 3 levels of CFA exams on the first time”.
> 2nd Case
> Q8 The answer told us the work experience was the
> benefit to the poor Jaeger. Does that mean if you
> have a job, you always have the benefit?
any experience you have gained is your benefit — so long as you don’t take any physical materials.
> 10th Case – GIPS
> Q58 The answer is fine. However, from the code, we
> need to present return both gross of fee and net
> of fee, right?
no. You pick one of them and disclose which one. The recommended one is gross of fee, however.
 
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