- CFA Exams
- CFA Level I Exam
- Topic 10. Ethical and Professional Standards
- Learning Module 3. Guidance for Standards I-VII
- Subject 7. Standard III (A) Loyalty, Prudence, and Care
CFA Practice Question
According to fiduciary duty standards set by ERISA, ______.
B. managers are expected to diversify to reduce risk of loss
C. pension fund managers act solely for the benefit of the plan sponsor
A. every individual investment must be suitable on its own
B. managers are expected to diversify to reduce risk of loss
C. pension fund managers act solely for the benefit of the plan sponsor
Correct Answer: B
User Contributed Comments 6
| User | Comment |
|---|---|
| danlan | How about A? |
| gord | Every individual investment may not be suitable on it's own but may be suitable in the context of the entire portfolio when considering diversification, correclation, etc... |
| wuyi | ERISA: Employee Retirement Income Security Act |
| TammTamm | A is not correct because it's not every investment on it's own, it's in reference to the entire portfolio. |
| bantoo | Yuppppp! |
| raffrobb | To Diversify is a recommended procedure for compliance, I think. |