CIC Ethical Business Practices 3

Question 1

A CIC receives a gift worth $250 from a vendor seeking to win the firm's brokerage business. Under typical ethics policies, the counselor should:

Accepted Answer

Decline or report the gift per firm policy, as it may create a conflict of interest

Answer

Gifts from vendors seeking business create conflicts of interest and must be handled per firm gift policy, which typically requires declining or reporting.

Question 2

Which statement about the fiduciary standard is most accurate for a Certified Investment Counselor?

Accepted Answer

It obligates the counselor to act in the client's best interest above the counselor's own interests

Answer

The fiduciary standard requires that a CIC place the client's best interests ahead of their own or the firm's interests at all times.

Question 3

An investment counselor discovers a material error in a client's account statement that overstates portfolio value. The ethical response is to:

Accepted Answer

Notify the client promptly and correct the error

Answer

Ethical standards require prompt disclosure and correction of errors that materially affect client account information.

Question 4

Under AIMR/CFA Institute performance presentation standards, composite performance results should include:

Accepted Answer

All fee-paying discretionary accounts that fit the composite definition, including terminated accounts

Answer

Composites must include all actual, fee-paying discretionary portfolios meeting the composite definition, including those that have been terminated.

Question 5

A CIC who simultaneously serves as a trustee for a client's estate and as the investment counselor for that estate faces:

Accepted Answer

A potential conflict of interest that must be disclosed and managed

Answer

Serving in dual roles for the same client creates potential conflicts that must be disclosed and managed appropriately.

(CIC) Certified Investment Counselor Practice Test

(CIC) Certified Investment Counselor Practice Test

CIC Ethical Business Practices 3