CFA Practice Question

There are 361 practice questions for this study session.

CFA Practice Question

Bill is a portfolio manager at Whitewater Advisors (WA). Bill manages two mutual funds along with a number of individual accounts. All of the portfolios, including the mutual funds, have similar return objectives, risk tolerances, and tax constraints. When Bill allocates shares from block trades, he fills the mutual fund orders first and then allocates the remaining shares to the individual accounts based on their portfolio size. When allocating shares from block trades, does Bill violate any CFA Institute Standards?
A. No
B. Yes, with respect to Fair Dealing.
C. Yes, with respect to Priority of Transaction.
Explanation: Members must deal fairly and objectively with clients when taking investment actions for them. By treating the mutual funds more favorably than the individual portfolios, Bill violates the standard relating to Fair Dealing.

User Contributed Comments 1

User Comment
fobucina So, would fair dealing not have been violated if mutual funds were allocated shares on a pro-rata basis?
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