- 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 one of the following statements is false with respect to the payment of brokerage commissions (soft dollars)?
B. Brokerage commissions paid should be commensurate with the value of the brokerage and research services received.
C. Brokerage commissions may be directed to pay for the investment manager's operating expenses.
A. Brokerage commissions may be directed to pay for securities research used in managing the client's portfolio.
B. Brokerage commissions paid should be commensurate with the value of the brokerage and research services received.
C. Brokerage commissions may be directed to pay for the investment manager's operating expenses.
Correct Answer: C
Brokerage commissions should be directed to ensure that fairness and loyalty to the client are maintained.
User Contributed Comments 3
| User | Comment |
|---|---|
| Chitu | Brokerage commission (soft dollar) must be utilised for the client by way of paying for the securities research not for the remittance of investment manager's operating expenses |
| apiccion | Key word here is soft dollar. |
| Hermalia | Another key word is false. I know I have to work on reading each question carefully. |