Question 1
Discuss how Kate’s circumstances will affect her allocation to each asset class and rate each allocation as low, medium, or high and, hence, recommend a portfolio that is most suitable for her. No calculations are required.

Question 2
Specify at most five (5) violations of the CFA Institute Code of Ethics and Standards of Professional Conduct. State clearly who violated the Code and Standards, which specific Standard or part of the Standard has been violated, and present evidence from the case to support your answer. Each non-violation that has been incorrectly identified as a violation will be penalised, as will any violations in excess of five, including correct ones.
 

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Jane recently passed her CFA Level II exam and joined Overseas United Bank (OUB) as a wealth manager. On her first day at work, she meets with her supervisor, Jacky, CFA, who introduces Jane to his team of wealth managers, who are responsible for a combined $1 billion in assets. Most of the accounts the team services are advisory in nature, although the team also manages some monies on a discretionary basis. Before Jane joined OUB, she had already heard about its notoriously bad legacy information systems. Things got so bad that when OUB's equity research analysts make a revision to their recommendations, it takes a day before the updated reports are published on their system for customer access. So as to prevent its discretionary customers from being disadvantaged relative to those of competitors, Jacky instructed his team to check with the equity research team twice a day to check for updates, and to communicate updates immediately to the customers of their discretionary accounts. Jacky advises Jane to do this as well, and she complies. A week in, Jacky asks Jane to meet with Kate, a prospective client, on an urgent basis as Kate will only be in town for a short time and will be flying off the next day. Since this is Jane's first potential client, she is eager to onboard the client. So she hurriedly schedules a first meeting with Kate for the next morning and quickly puts together six "stock" portfolios. At their first meeting, Jane plans to recommend one of these portfolios to Kate. At the meeting, Jane notes that Kate is a 40-year-old property agent living in the United States, with investable assets of USD20 million. Of this amount, Kate needs about $2 million three months from now in order to make a housing downpayment. She is not a big spender but hopes to fund at least part of her annual expenses, which are highly predictable, from her investment portfolio for the next twenty years. She is concerned, however, about the general increase in the prices of goods and services over time. Furthermore, Kate would like a portfolio that can be liquidated quickly and at fair value. She strongly supports American businesses and would like her investments to primarily contribute to the overall growth of the US economy. Jane recently passed her CFA Level II exam and joined Overseas United Bank (OUB) as a wealth manager. On her first day at work, she meets with her supervisor, Jacky, CFA, who introduces Jane to his team of wealth managers, who are responsible for a combined $1 billion in assets. Most of the accounts the team services are advisory in nature, although the team also manages some monies on a discretionary basis. Before Jane joined OUB, she had already heard about its notoriously bad legacy information systems. Things got so bad that when OUB's equity research analysts make a revision to their recommendations, it takes a day before the updated reports are published on their system for customer access. So as to prevent its discretionary customers from being disadvantaged relative to those of competitors, Jacky instructed his team to check with the equity research team twice a day to check for updates, and to communicate updates immediately to the customers of their discretionary accounts. Jacky advises Jane to do this as well, and she complies. A week in, Jacky asks Jane to meet with Kate, a prospective client, on an urgent basis as Kate will only be in town for a short time and will be flying off the next day. Since this is Jane's first potential client, she is eager to onboard the client. So she hurriedly schedules a first meeting with Kate for the next morning and quickly puts together six "stock" portfolios. At their first meeting, Jane plans to recommend one of these portfolios to Kate. At the meeting, Jane notes that Kate is a 40-year-old property agent living in the United States, with investable assets of USD20 million. Of this amount, Kate needs about $2 million three months from now in order to make a housing downpayment. She is not a big spender but hopes to fund at least part of her annual expenses, which are highly predictable, from her investment portfolio for the next twenty years. She is concerned, however, about the general increase in the prices of goods and services over time. Furthermore, Kate would like a portfolio that can be liquidated quickly and at fair value. She strongly supports American businesses and would like her investments to primarily contribute to the overall growth of the US economy.

Answer rating: 100% (QA)

Answer Explanation Following is the ranking for various assets for Kates portfolio I Rank 1 US Intermediate term bonds As the risk is lower term is le... View the full answer