- 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
Which of the following are fiduciary duties?
B. confidentiality, loyalty, prudence, diversification
C. loyalty, prudence, care
A. prudence, diversification, risk reduction and sound management
B. confidentiality, loyalty, prudence, diversification
C. loyalty, prudence, care
Correct Answer: C
User Contributed Comments 13
| User | Comment |
|---|---|
| ameba | Why the answer is not B? |
| Nick179 | Yes, why not B? There is not much diference between B and C, but B looks better. |
| mike250 | Fiduciary duties do not include diversification and confidentiality. |
| 0is4eva | Definition of III(A) includes: "M&Cs have a duty of LOYALTY to their clients and must act with reasonalbe CARE and exercise PRUDENT judgement. ... determine applicable FIDUCIARY DUTY ... to whom it is owed" One must thus know the definitions of each standard "by heart", even though the other key words might be good for a member or candidate to follow, they are not brought up in the context of FIDUCIARY DUTY under standard III(A) and are thus not eligible choices here. |
| quynhnk79 | The key: FIDUCIARY DUTY |
| TammTamm | Hence the title of this standard-loyalty, prudence & care |
| giroth | Diversification may not be a goal of a client, therefore does not belong in definition of fiduciary duty |
| rsanfo | Fiduciary duty applies to a variety of jobs, for example a Lawyer. Therefore, answers A and B are incorrect because diversification is relevant for a Financial Analyst, but not for a Lawyer, for example. |
| adilizhan | Because B does not include care. Reasonable care is a part of fiduciary duty. |
| Shaan23 | Just memorize the definition and do the question. Dont think. |
| shash0678 | Fiduciary duty is a position of trust, and confidentiality is not needed - sounds very awkward, if not completely incorrect. IMHO, B should be the answer too (though diversification may not be fully correct) |
| shaiarah | By definition. Shaan23 is right - dont overthink it |
| Rachelle3 | fiduciary duty is Fruit or a Food - prudence like a prune fiduciary duty is what you Feel - care fiduciary duty is Forever - loyalty it seem strange but its how I remember it!!! notice what I did with all those F's? = > |