Deck 20: Fiduciary Duties and Responsibilities

Question 1

Which of the following is probably least likely to serve as a fiduciary?

A) Stockbroker
B) Lawyer
C) Bank trust officer
D) Security analyst

Answer 1

Security analyst

Question 2

The origin of modern fiduciary law is probably the

A) Prudent Man Rule
B) Prudent Expert Rule
C) Spitzer case
D) Uniform Prudent Expert Act

Answer 2

Prudent Man Rule

Question 3

Which of the following came from the Spitzer v Bank of New York case?

A) Portfolios do not necessarily have to be diversified
B) The fact that a portfolio went up in value is not evidence it was managed prudently
C) A loss of value is evidence of imprudent management
D) A reasonable person may occasionally speculate

Answer 3

The fact that a portfolio went up in value is not evidence it was managed prudently

Question 4

The Prudent Expert Rule came from

A) Harvard College v Amory
B) Spitzer case
C) ERISA
D) Uniform Management of Institutional Funds Act

Question 5

Which of the followed is most recent?

A) Uniform Prudent Investor Act
B) Harvard College v Amory
C) ERISA
D) Uniform Management of Institutional Funds Act

Question 6

Which of the following is not an element of the duty of care?

A) Diversification rule
B) Documents rule
C) Statutory evidence rule
D) Indicia of ownership rule

Question 7

Which of the following is an element of the duty of loyalty?

A) Sole interest of the beneficiary rule
B) Prudent expert rule
C) Diversification rule
D) Reasonable basis rule

Question 8

Under ERISA, all of the following are prohibited transactions except

A) foreign investment restrictions
B) general transaction restrictions
C) fiduciary conduct restrictions
D) property restrictions

Question 9

The legal status of social investing is

A) it is clearly allowed
B) it is clearly disallowed
C) it is unclear
D) not addressed

Question 10

A fiduciary must

A) vote proxies
B) vote proxies if the client wishes him or her to do so
C) always vote proxies in the best interest of the client
D) always vote in accordance with management's recommendations

Question 11

Annual meetings frequently have a vote on a shareholder proposal regarding

A) employee retirement plans
B) cumulative voting
C) acquisitions
D) divestitures

Question 12

A common shareholder proposal dealing with environmental issues is

A) ACTNOW
B) NOWAY
C) CHIRP
D) CERES

Question 13

Soft dollar arrangements are legal in conjunction with

A) research
B) travel
C) equipment
D) salaries

Question 14

A fiduciary is

A) the person who owns an investment account
B) the person who buys and sells the securities in the account under the direction of the investment manager
C) the person who uses his discretion in managing the account
D) generally not considered an "expert" in money management matters

Question 15

The Prudent Man rule means an investment manager must

A) be morally sound
B) not lose money over the long run
C) not invest the client's funds in highly risky investments
D) use good judgment and make decisions consistent with how reasonable people manage their own money

Question 16

Which of the following is not one of the four elements of the duty of care?

A) Prudent expert standard
B) Diversification rule
C) Documents rule
D) Privacy rule