CFA Practice Question

There are 361 practice questions for this study session.

CFA Practice Question

Gary Ply, a member of a large investment firm, has just secured a new client. In terms of CFA Institute's Standards of Professional Conduct when dealing with the procedures for compliance per Standard III (C) Suitability, which of the following factors need to be considered when looking at the new investor's constraints?

I. liquidity needs
II. time horizon
III. tax considerations
IV. proxy voting responsibilities and guidance
A. I, II, III and IV
B. II, III and IV
C. I, II and III
Explanation: The following are the factors that need to be considered when looking at a new investor's constraints: liquidity needs, expected cash flows, investable funds, time horizon, tax considerations, regulatory and legal circumstances, investor preferences, circumstances and unique needs, proxy voting responsibilities and guidance.

User Contributed Comments 13

User Comment
eris why proxy voting?
danlan2 I think some investors like "proxy votiing". ~_~
Shelton Liquity,
Time horizon,
Tax,
Proxy voting,
Regulatory & Legal cirsumstances,
(investable) Funds,
(investor) Preferences,
(expected) Cash Flows
christine regarding proxy voting: advisor needs to make inquiry into how investor wants advisor to handle proxies (ie: responsibilities and guidelines)
lukeg Why proxy voting guidance, when presumably you haven't even determined what investments will be made? How can you advise on these if you don't know them yet?
mazurin Proxies have economic value to a client, so we (members&candidates) must ensure that they properly safeguard and maximise this value.
dblueroom why is that a constraint? it is probably a responsiblity an advisor needs to attend to. anyway...
toxoplasmosis why do we have to consider proxy voting?
kwesiman But proxy voting preference is not a constraint
Tommytang i agree with toxoplasmosis
gill15 Suitability --- You need to find your clients constraints, needs and all that stuff -- everything.

Do you want your advisor to be able to vote on your behalf or not....stick that on your IPS...
alles Proxy voting is not a constraint. The question asks about investors constraints.
bjw699 The question isn't worded too well. Proxy voting policy can be viewed as a constraint as you may not be allowed to vote certain ways based on client preference or association with the subject of the proxy vote.
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