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Exam Elaboration | Business
CAIA Exam Sample
SKU: CAIA Exam Sample | Pages: 22 | Year: 2024
Document Brief Description
CAIA Exam Sample
Samuel Tong, CAIA, has clients who await his recommendation of a particular stock that is
about to release earnings. From his off...
CAIA Exam Sample
Samuel Tong, CAIA, has clients who await his recommendation of a particular stock that is
about to release earnings. From his office he sends the single recommendation "Sell" to all his
clients via a text message that includes the phrase "more info on web." Does this communication
violate Standard V(B): Communication with Clients and Prospective Clients? - ✔✔No
A communication may be in capsule form but members should notify clients that additional
information and analyses are available from the producer of the report
Standard VI(A): Disclosure of Conflicts states that members and candidates must make - ✔✔full
and fair disclosure of all matters that could reasonably be expected to impair the independence
and objectivity or interfere with respective duties to their clients, prospective clients, and
employer. Even friends.
Standard IV(C): Responsibilities of Supervisors states that members and candidates must make
reasonable efforts to ensure that anyone subject to their supervision or authority complies with
applicable laws, rules, regulations, and the Code and Standards. - ✔✔Mr. Malone has committed
no violation. He has informed his supervisor, the CEO, of the model changes. It is the CEO's
responsibility to inform the investors.
Maxwell Chalmers, CAIA, is the founder of and a partner in a quantitative hedge fund. He has
developed a proprietary factor model that tracks social media patterns to identify market supply
and demand trends. His model was developed and tested using 12 months of data. Based on the
evidence, he concludes that the model will generate trading signals that will result in
outperformance over the coming 24 months. Mr. Chalmers has prepared a research report in
which he clearly explains these elements, and he has distributed the report to the fund's partners,
but not to his clients. In the report, he makes a recommendation that the fund implement the
model. What standard has Mr. Chalmers violated? - ✔✔Standard V(A): Diligence and
Reasonable Basis states that members and candidates must have a reasonable and adequate basis,
supported by appropriate research and investigation, for any investment analysis,
recommendation, or action. In this case, because Mr. Chalmers used only 12 months of data (a
time horizon that is likely to be too short to incorporate both positive and negative market cycles)
to project over the coming 24 months, he has failed to exercise a reasonable basis in his analysis.
According to the guidance section for Standard I(B): Independence and Objectivity, members
and candidates who are responsible for hiring and retaining outside managers should not -
✔✔accept gifts, entertainment, or travel funding that may be perceived as impairing their
decisions.
According to Standard VI(C): Referral Fees, members and candidates must inform their clients
and employer about - ✔✔services that would be received as well as an estimate of the value of
those services. In this case, general disclosure (to the clients and to the employer) is
recommended.
Standard IV(A): Loyalty does not preclude one from opening an independent practice. -
✔✔However, before opening such a practice, one should obtain authorization from his or her
current employer. Thus, Ms. Sikorska must obtain authorization.
Absolute return standard
- 22-pages detailed model answer (PDF + online view)
- Clinical reasoning & medication selection justified
- NP-level explanation with key teaching points
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