CIC Ethical Business Practices 4

Question 1

A CIC is offered a speaking engagement at a conference sponsored by a company whose securities the counselor actively recommends to clients. The most ethical course of action is to:

Accepted Answer

Accept and disclose the sponsorship relationship to the audience and to clients

Answer

Accepting the engagement is permissible if the counselor discloses the sponsorship relationship to maintain transparency and manage conflicts.

Question 2

Which of the following is NOT considered a component of the duty of loyalty owed by a CIC to clients?

Accepted Answer

Guaranteeing a minimum rate of return on investments

Answer

Guaranteeing investment returns is not part of the duty of loyalty; it is also prohibited because no investment outcome can be guaranteed.

Question 3

Under the Investment Advisers Act of 1940, which action requires prior written client consent?

Accepted Answer

Assigning the advisory contract to another adviser

Answer

Assignment of an advisory contract to another adviser requires prior written client consent under the Investment Advisers Act of 1940.

Question 4

An investment counselor's written investment policy statement (IPS) for a client should primarily serve to:

Accepted Answer

Document the client's objectives, constraints, and guidelines to govern portfolio management

Answer

The IPS documents the client's specific investment objectives, risk tolerance, time horizon, and constraints to guide all portfolio decisions.

Question 5

Which scenario best illustrates a violation of the standard of independence and objectivity?

Accepted Answer

A CIC changes a sell recommendation to a buy after a company threatens to remove the firm from its approved broker list

Answer

Changing a recommendation due to threats or pressure from a covered company violates independence and objectivity standards.

(CIC) Certified Investment Counselor Practice Test

(CIC) Certified Investment Counselor Practice Test

CIC Ethical Business Practices 4