CIC Fiduciary Duty and Responsibilities 5

Question 1

A CIC managing charitable endowment funds must balance current spending needs with preservation for future beneficiaries. This obligation is known as:

Accepted Answer

Duty of impartiality

Answer

The duty of impartiality requires fiduciaries to balance the interests of current beneficiaries against those of future beneficiaries when managing trust or endowment assets.

Question 2

When a fiduciary receives a gift from a client, the most appropriate course of action is to:

Accepted Answer

Refuse or disclose the gift per firm policy, as gifts can compromise fiduciary objectivity

Answer

Gifts can create conflicts of interest or the appearance of impropriety; fiduciaries should follow firm gift policies, which typically require refusal or disclosure.

Question 3

What does the 'no-further-inquiry' rule mean in fiduciary law?

Accepted Answer

Transactions involving a fiduciary's self-interest are voidable without needing to prove actual harm

Answer

The no-further-inquiry rule holds that transactions in which a fiduciary has a personal interest are presumptively voidable, regardless of whether actual harm occurred.

Question 4

A fiduciary investment counselor's client passes away. What is the advisor's immediate obligation regarding the client's account?

Accepted Answer

Freeze all trading activity and notify the executor or legal representative of the estate

Answer

Upon a client's death, the advisor should cease trading and promptly notify the estate's executor or administrator to ensure proper legal transfer of assets.

Question 5

Which of the following best illustrates the concept of 'material non-public information' as it relates to fiduciary duty?

Accepted Answer

Non-disclosed merger information received from a corporate insider used to trade client accounts

Answer

Using material non-public information to trade violates insider trading laws and represents a severe breach of fiduciary duty and securities regulations.

(CIC) Certified Investment Counselor Practice Test

(CIC) Certified Investment Counselor Practice Test

CIC Fiduciary Duty and Responsibilities 5