Question

QUESTION 149

1. Which of the following best describes the duty of a fiduciary?

   		a. To manage the portfolio in a manner that is prudent.
   		b. To make investment recommendations that are suitable.
   		c. To act in good faith and with care, candor, and loyalty.
   		d. To ensure that the client's goals are reached in a tax efficient manner.

QUESTION 150

1. Put the following activities of portfolio management in the correct order: (1) Select assets for the portfolio. (2) Appraise expectations in the capital markets. (3) Rebalance.

   		a. 2, 1, 3.
   		b. 1, 2, 3.
   		c. 1, 3, 2.
   		d. 2, 3, 1.

Answer 1

Q149: c. To act in good faith and with care, candor, and loyalty.

The fiduciary duty is to act in the best interests of the principal. Other options are ancillary duties of a fiduciary.

Q 150: a. 2, 1, 3.

The first step in portfolio management is to appraise expectations in the capital market. This is done via conducting research, expectation setting and finding the best sources of information. The next step is to select the appropriate assets. Finally rebalancing the assets to meet the needs of the investor is required.