- 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
In voting proxies, fund managers should give priority to the ______.
B. interest of the fund's sponsors
C. interest of the fund's beneficiaries
A. interest of the shareholders of the company where the fund managers work
B. interest of the fund's sponsors
C. interest of the fund's beneficiaries
Correct Answer: C
User Contributed Comments 6
| User | Comment |
|---|---|
| rinkoo | why not shareholders of the company |
| sajgon | can somebody pls. give me explanation of "voting proxy" term? thanx a lot |
| DonDon | Proxy voting is a task done by the investment manager on behalf of its client. The reason the fund manager should vote in the interest of the beneficiaries in this example is because the client of the fund manager is a pension plan. In turn, the owner of the assets of the pension plan is the beneficiaries. Hope this helps. To further clarify, for example you purchase a stock on your own, you will vote the proxy ballot when there is one, but when you hire a fund manager to managed your assets, you can ask the fund manager to vote your proxies. In this situation, you are giving the fund manager authorization to vote on your behalf. That is where Proxy Voting comes from. Hope this helps. |
| StanleyMo | very useful explanation dondon |
| TammTamm | priority wouldn't be given to the shareholders of the fund company because the end of the statement said "where managers work". |
| Nephi | Wow, that's very helpful. Thanks DonDon. |