Question 2 (20 marks) a) Define the principal-agent problem with reference to asset owners and asset managers? (2 Marks) b) Thato (CFA) manages a portfolio for the Clive Barry, a very wealthy client. Clive Barry's portfolio is well diversified with a slight tilt towards capital preservation. Recently, Clive's brother (Harry) also became Thato's client. Thato proceeds to invest Harry's portfolio in a similar manner to that of Clive (given both brothers have similar lifestyle and only 3 years apart in age). Is Thato in contravention of any CFA Standards of Professional Conduct? If so, which one and how? (5 Marks) c) Diane (CFA) works for a money management firm. Recently a friend asked her to act as an unpaid volunteer manager for the city's pension fund. As part of the position the city would grant Diane free parking space in front of her downtown office. She is considering the offer. How would you advise her to proceed if she wishes to accept the offer? (4 Marks) d) Daniel (CFA) is an investment analyst covering the water sports leisure industry. He is also an avid surfer. After trying the surfing gear from Surfers Incorporated, which has been said to be the hottest new gear" decides to add Surfers Incorporated to his "buy" list. Which CFA Standard of Professional Conduct is Daniel in contravention of and why? (4 Marks) e) Angela (CFA) is a citizen of Zemunda with no securities laws governing the use of material non-public information. She has clients in Zemunda and Wakanda - the latter also having poorly defined laws governing the use of material non-public information. Angela has material non-public material she could use in both Zemunda and Wakanda. In which country can Angela use this information without being in contravention of the CFA Standards of Professional Conduct and why? (5 Marks) Question 2 (20 marks) a) Define the principal-agent problem with reference to asset owners and asset managers? (2 Marks) b) Thato (CFA) manages a portfolio for the Clive Barry, a very wealthy client. Clive Barry's portfolio is well diversified with a slight tilt towards capital preservation. Recently, Clive's brother (Harry) also became Thato's client. Thato proceeds to invest Harry's portfolio in a similar manner to that of Clive (given both brothers have similar lifestyle and only 3 years apart in age). Is Thato in contravention of any CFA Standards of Professional Conduct? If so, which one and how? (5 Marks) c) Diane (CFA) works for a money management firm. Recently a friend asked her to act as an unpaid volunteer manager for the city's pension fund. As part of the position the city would grant Diane free parking space in front of her downtown office. She is considering the offer. How would you advise her to proceed if she wishes to accept the offer? (4 Marks) d) Daniel (CFA) is an investment analyst covering the water sports leisure industry. He is also an avid surfer. After trying the surfing gear from Surfers Incorporated, which has been said to be the hottest new gear" decides to add Surfers Incorporated to his "buy" list. Which CFA Standard of Professional Conduct is Daniel in contravention of and why? (4 Marks) e) Angela (CFA) is a citizen of Zemunda with no securities laws governing the use of material non-public information. She has clients in Zemunda and Wakanda - the latter also having poorly defined laws governing the use of material non-public information. Angela has material non-public material she could use in both Zemunda and Wakanda. In which country can Angela use this information without being in contravention of the CFA Standards of Professional Conduct and why
