CFA Practice Question

There are 361 practice questions for this study session.

CFA Practice Question

Vickery, a trustee for the pension plan of Richardson Industries, has just received a commission schedule from XYZ Brokerage, a firm with which he is not currently trading. The fee schedule is lower than that charged by ABC Brokerage, the firm Vickery now uses for most transactions. ABC also provides research data and performance measurement for the pension plan, services which XYZ is not equipped to handle. Vickery is concerned that he may be violating his fiduciary duty of loyalty by not using the lowest-cost brokerage firm. Which one of the following statements is true?
A. Vickery will violate his fiduciary duty unless he immediately transfers his entire business to XYZ.
B. Vickery will not violate his fiduciary duty unless he personally profits from his relationship with ABC.
C. Vickery can continue to trade through ABC if he determines, in good faith, that the value of the services is commensurate with the cost.

User Contributed Comments 8

User Comment
dzam Yeah, what about B?
mariam84 Why A is incorrect?
Lamkerst Fiduciary duty is to do the best deal for the pension plan. ABC provides more services, so higher fee is justified.
aggabad B is false because of word "personally" - the company he works for cannot profit either
toxoplasmosis Why not B?
Monubhai Any proper explanation Why not B
mhanazi123 fiduciary duty has nothing to do with personal interest (conflict of interest) it relates to maximizing clients gain
ashish100 Its not B because there's more ways he can violate his fiduciary duty other than just by making personal profits. Can't think of an example right now but C makes way more sense.

XYZ is not equipped to handle everything so why go with something cheap if it can't even do the job. go with ABC as long its worth paying for it.
Just my 2 bucks.
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