Joseph Glass, CFA, is a consultant who provides ad...

第1题

The appointment of Santos, an industry “insider”, to head the regulatory agency in Venezuela has the

Joseph Glass, CFA, is a consultant who provides advisory services to large manufacturing companies. Glass has been retained by ABCO, a leading manufacturer of widgets for automobiles in the United States. ABCO has hired Glass to evaluate the possibility of expanding their current base of operations by building an additional facility in South America. Management of ABCO has identified anincrease in demand for widgets in South America over the past decade, and any new manufacturing facility would produce goods to satisfy that void and would be distributed and sold across South America.

Glass is not familiar with the current economic climate in South America, but is aware that several governments have attempted to encourage economic development in their countries through the enactment of pro-business legislation. Two of these countries, Venezuela and Peru, both have the reputations of being “friendly” to foreign economic investment within their borders. The two countries share some similarities: both, until the past twenty years, were primarily agricultural economies with little industrial development. Also, both countries can offer a relatively low-cost labor force, although their workers in general, are not highly skilled.

The government of Peru has declared that protecting the country’s environment is of utmost importance, and has established a regulatory body that oversees any environmental concerns that may arise as the country becomes more industrialized. Fairly stringent regulations have already been put into place in order to ensure that going forward, the operating practices of manufacturers within their country’s borders will be in balance with the government’s concern for their county’s natural resources. Regulations cover areas of concern such as air emissions, water conservation and the use of sustainable resources. Glass advised ABCO that a cost-benefit analysis must be performed to accurately determine both the direct and indirect costs of compliance with the regulations.

The Venezuelan government has taken steps to ensure that it can carefully manage the development of its country’s emerging economy, and to ensure that a competitive market is maintained. A regulatory agency was established five years ago to provide guidance for any new manufacturing concern seeking to operate in Venezuela. The head of the agency is Juan Santos, the former CEO of one of the first modernized manufacturing facilities in the country. During his tenure as head of the agency, he has demonstrated his ability to render decisions that attempt to simultaneously satisfy legislators, industry participants, and consumers. Glass is impressed by Santos’ work so far, but realizes that over the past five years, Venezuela has experienced a period of relatively slow economic development. Glass believes that Santos’ skills will truly be put to the test in the upcoming years of the anticipated economic expansion.

Glass acknowledges the need for governmental regulation of industry, but recognizes that there always are offsetting costs, both short-term and long-term of such controls. Based upon his knowledge of events that have occurred in the United States over the past thirty years, Glass recommends that ABCO continue to carefully monitor economic developments in both countries even after a site for a new manufacturing facility is selected.

Part 4)

The appointment of Santos, an industry “insider”, to head the regulatory agency in Venezuela has the potential to cause a reaction predicted by which of the following theories of regulatory behavior?

A) Rate-of-return regulation.

B) Share-the-gains, share-the-pains theory.

C) The capture hypothesis.

D) Cost-of-service regulation.

点击查看答案

第2题

Santos, as the head of the main regulatory body in Venezuela, must decide how to manage the effects

Joseph Glass, CFA, is a consultant who provides advisory services to large manufacturing companies. Glass has been retained by ABCO, a leading manufacturer of widgets for automobiles in the United States. ABCO has hired Glass to evaluate the possibility of expanding their current base of operations by building an additional facility in South America. Management of ABCO has identified anincrease in demand for widgets in South America over the past decade, and any new manufacturing facility would produce goods to satisfy that void and would be distributed and sold across South America.

Glass is not familiar with the current economic climate in South America, but is aware that several governments have attempted to encourage economic development in their countries through the enactment of pro-business legislation. Two of these countries, Venezuela and Peru, both have the reputations of being “friendly” to foreign economic investment within their borders. The two countries share some similarities: both, until the past twenty years, were primarily agricultural economies with little industrial development. Also, both countries can offer a relatively low-cost labor force, although their workers in general, are not highly skilled.

The government of Peru has declared that protecting the country’s environment is of utmost importance, and has established a regulatory body that oversees any environmental concerns that may arise as the country becomes more industrialized. Fairly stringent regulations have already been put into place in order to ensure that going forward, the operating practices of manufacturers within their country’s borders will be in balance with the government’s concern for their county’s natural resources. Regulations cover areas of concern such as air emissions, water conservation and the use of sustainable resources. Glass advised ABCO that a cost-benefit analysis must be performed to accurately determine both the direct and indirect costs of compliance with the regulations.

The Venezuelan government has taken steps to ensure that it can carefully manage the development of its country’s emerging economy, and to ensure that a competitive market is maintained. A regulatory agency was established five years ago to provide guidance for any new manufacturing concern seeking to operate in Venezuela. The head of the agency is Juan Santos, the former CEO of one of the first modernized manufacturing facilities in the country. During his tenure as head of the agency, he has demonstrated his ability to render decisions that attempt to simultaneously satisfy legislators, industry participants, and consumers. Glass is impressed by Santos’ work so far, but realizes that over the past five years, Venezuela has experienced a period of relatively slow economic development. Glass believes that Santos’ skills will truly be put to the test in the upcoming years of the anticipated economic expansion.

Glass acknowledges the need for governmental regulation of industry, but recognizes that there always are offsetting costs, both short-term and long-term of such controls. Based upon his knowledge of events that have occurred in the United States over the past thirty years, Glass recommends that ABCO continue to carefully monitor economic developments in both countries even after a site for a new manufacturing facility is selected.

Part 5)

Santos, as the head of the main regulatory body in Venezuela, must decide how to manage the effects of an unanticipated sharp increase in the cost of electricity. Santos proposed regulation that will allow manufacturers to pass on the increased costs at scheduled intervals over a five year period. This approach is an example of:

A) rate of return regulation.

B) cost-of-service regulation.

C) share-the-gains, share-the-pains theory.

D) social regulation.

点击查看答案

第3题

Both Peru and Venezuela have increased the level of governmental regulation as the countries have

Joseph Glass, CFA, is a consultant who provides advisory services to large manufacturing companies. Glass has been retained by ABCO, a leading manufacturer of widgets for automobiles in the United States. ABCO has hired Glass to evaluate the possibility of expanding their current base of operations by building an additional facility in South America. Management of ABCO has identified anincrease in demand for widgets in South America over the past decade, and any new manufacturing facility would produce goods to satisfy that void and would be distributed and sold across South America.

Glass is not familiar with the current economic climate in South America, but is aware that several governments have attempted to encourage economic development in their countries through the enactment of pro-business legislation. Two of these countries, Venezuela and Peru, both have the reputations of being “friendly” to foreign economic investment within their borders. The two countries share some similarities: both, until the past twenty years, were primarily agricultural economies with little industrial development. Also, both countries can offer a relatively low-cost labor force, although their workers in general, are not highly skilled.

The government of Peru has declared that protecting the country’s environment is of utmost importance, and has established a regulatory body that oversees any environmental concerns that may arise as the country becomes more industrialized. Fairly stringent regulations have already been put into place in order to ensure that going forward, the operating practices of manufacturers within their country’s borders will be in balance with the government’s concern for their county’s natural resources. Regulations cover areas of concern such as air emissions, water conservation and the use of sustainable resources. Glass advised ABCO that a cost-benefit analysis must be performed to accurately determine both the direct and indirect costs of compliance with the regulations.

The Venezuelan government has taken steps to ensure that it can carefully manage the development of its country’s emerging economy, and to ensure that a competitive market is maintained. A regulatory agency was established five years ago to provide guidance for any new manufacturing concern seeking to operate in Venezuela. The head of the agency is Juan Santos, the former CEO of one of the first modernized manufacturing facilities in the country. During his tenure as head of the agency, he has demonstrated his ability to render decisions that attempt to simultaneously satisfy legislators, industry participants, and consumers. Glass is impressed by Santos’ work so far, but realizes that over the past five years, Venezuela has experienced a period of relatively slow economic development. Glass believes that Santos’ skills will truly be put to the test in the upcoming years of the anticipated economic expansion.

Glass acknowledges the need for governmental regulation of industry, but recognizes that there always are offsetting costs, both short-term and long-term of such controls. Based upon his knowledge of events that have occurred in the United States over the past thirty years, Glass recommends that ABCO continue to carefully monitor economic developments in both countries even after a site for a new manufacturing facility is selected.

Part 6)

Both Peru and Venezuela have increased the level of governmental regulation as the countries have become more industrialized. A major argument in opposition of heavy regulation contends that the removal of governmental-imposed barriers to entry will actually lead to more competitive markets, and is referred to as:

A) deregulation.

B) the market share test.

C) the theory of contestable markets.

D) the theory of relevant markets.

点击查看答案

第4题

If ABCO were to build its new facility in Peru, compliance with the country’s regulatory policies will increase

Joseph Glass, CFA, is a consultant who provides advisory services to large manufacturing companies. Glass has been retained by ABCO, a leading manufacturer of widgets for automobiles in the United States. ABCO has hired Glass to evaluate the possibility of expanding their current base of operations by building an additional facility in South America. Management of ABCO has identified anincrease in demand for widgets in South America over the past decade, and any new manufacturing facility would produce goods to satisfy that void and would be distributed and sold across South America.

Glass is not familiar with the current economic climate in South America, but is aware that several governments have attempted to encourage economic development in their countries through the enactment of pro-business legislation. Two of these countries, Venezuela and Peru, both have the reputations of being “friendly” to foreign economic investment within their borders. The two countries share some similarities: both, until the past twenty years, were primarily agricultural economies with little industrial development. Also, both countries can offer a relatively low-cost labor force, although their workers in general, are not highly skilled.

The government of Peru has declared that protecting the country’s environment is of utmost importance, and has established a regulatory body that oversees any environmental concerns that may arise as the country becomes more industrialized. Fairly stringent regulations have already been put into place in order to ensure that going forward, the operating practices of manufacturers within their country’s borders will be in balance with the government’s concern for their county’s natural resources. Regulations cover areas of concern such as air emissions, water conservation and the use of sustainable resources. Glass advised ABCO that a cost-benefit analysis must be performed to accurately determine both the direct and indirect costs of compliance with the regulations.

The Venezuelan government has taken steps to ensure that it can carefully manage the development of its country’s emerging economy, and to ensure that a competitive market is maintained. A regulatory agency was established five years ago to provide guidance for any new manufacturing concern seeking to operate in Venezuela. The head of the agency is Juan Santos, the former CEO of one of the first modernized manufacturing facilities in the country. During his tenure as head of the agency, he has demonstrated his ability to render decisions that attempt to simultaneously satisfy legislators, industry participants, and consumers. Glass is impressed by Santos’ work so far, but realizes that over the past five years, Venezuela has experienced a period of relatively slow economic development. Glass believes that Santos’ skills will truly be put to the test in the upcoming years of the anticipated economic expansion.

Glass acknowledges the need for governmental regulation of industry, but recognizes that there always are offsetting costs, both short-term and long-term of such controls. Based upon his knowledge of events that have occurred in the United States over the past thirty years, Glass recommends that ABCO continue to carefully monitor economic developments in both countries even after a site for a new manufacturing facility is selected.

Part 3)

If ABCO were to build its new facility in Peru, compliance with the country’s regulatory policies will increase the price of their product by approximately ten percent. Some consumers may respond by not replacing the widgets in their automobiles as frequently as before, which will cause decreased fuel efficiency. This unintended effect of regulation is an example of:

A) the capture hypothesis.

B) a creative response.

C) a feedback effect.

D) the share-the-gains, share-the-pains theory.

点击查看答案

第5题

Yuan, CFA, is a portfolio manager, who has two clients. Both clients have the same amount of money in their accounts. Yuan thinks that a recession is coming, so he begins to increase the proportion of less risky assets in each account. In order to comply with Standard V (B), Communication with Clients and Prospective Clients, Yuan should:

A.ensure that he does the same investment strategy for both clients.

B.communicate with both clients about the change and inform them that the investment is based on his opinion.

C.do both of that.

点击查看答案

第6题

Jenson Button, CFA, is a product development manager at a private equity fund. He is in charge of developing and promoting a new structured financial product, CBO ( bond obligation), which includes many emerging-market corporate bonds. In the product-related catalog, Button discloses a list of selected underlying bonds. The catalog also mentions about one independent collateral agency, who has discretion over the selection of all corporate bonds. In fact, Button has discussed with the collateral agency manager many times and instructed him to select bonds for the CBO. Button is most likely to violate which of the following CFA Institute Standards of Professional Conduct?

A.Disclosure of Conflicts.

B.Suitability.

C.Diligence and Reasonable Basis.

点击查看答案

第7题

Yuan, CFA, is a bond research analyst in XYZ securities. XYZ securities hold a large position in the bond of Carly Group. In last week, many securities company change the stock recommendation of Carly Group, since the disappointing financial report just released.It also led to the collapse of Carly bond prices. Yuan’s supervisor asked Yuan to call their clients and convinced them to continue holding the bonds of Carly Group. However, Yuan had a different thought. He believed the Carly bond price was overvalued.Which of the following action is the most appropriate to comply with the CFA Institute Code of Ethics and Standards of Professional Conduct, Yuan should:

A.make these calls with prominent disclose.

B.follow his supervisor’s request, because of the chain of command.

C.deny his supervisor’s request.

点击查看答案

第8题

Clara Holmes, CFA, is attempting to model the impo...

Clara Holmes, CFA, is attempting to model the importation of an herbal tea into the United States. She gathers 24 years of annual data, which is in millions of inflation-adjusted dollars. The real dollar value of the tea imports has grown steadily from $30 million in the first year of the sample to $54 million in the most recent year.

She computes the following equation:

(Tea Imports)t = 3.8836 + 0.9288 × (Tea Imports)t ? 1 + et

t-statistics (0.9328)(9.0025)

R2 = 0.7942

Adj. R2 = 0.7844

SE = 3.0892

N = 23

Holmes and her colleague, John Briars, CFA, discuss the implication of the model and how they might improve it. Holmes is fairly satisfied with the results because, as she says “the model explains 78.44 percent of the variation in the dependent variable.” Briars says the model actually explains more than that.

Briars asks about the Durbin-Watson statistic. Holmes said that she did not compute it, so Briars reruns the model and computes its value to be 2.1073. Briars says “now we know serial correlation is not a problem.” Holmes counters by saying “rerunning the model and computing the Durbin-Watson statistic was unnecessary because serial correlation is never a problem in this type of time-series model.”

Briars and Holmes decide to ask their company’s statistician about the consequences of serial correlation. Based on what Briars and Holmes tell the statistician, the statistician informs them that serial correlation will only affect the standard errors and the coefficients are still unbiased. The statistician suggests that they employ the Hansen method, which corrects the standard errors for both serial correlation and heteroskedasticity.

Given the information from the statistician, Briars and Holmes decide to use the estimated coefficients to make some inferences. Holmes says the results do not look good for the future of tea imports because the coefficient on (Tea Import)t ? 1 is less than one. This means the process is mean reverting. Using the coefficients in the output, says Holmes, “we know that whenever tea imports are higher than 41.810, the next year they will tend to fall. Whenever the tea imports are less than 41.810, then they will tend to rise in the following year.” Briars agrees with the general assertion that the results suggest that imports will not grow in the long run and tend to revert to a long-run mean, but he says the actual long-run mean is 54.545. Briars then computes the forecast of imports three years into the future.

Part 1)

With respect to the statements made by Holmes and Briars concerning serial correlation and the importance of the Durbin-Watson statistic:

A) Holmes was correct and Briars was incorrect.

B) Briars was correct and Holmes was incorrect.

C) they were both correct.

D) they were both incorrect.

点击查看答案

第9题

Question 6

Kevin Blank, CFA, is a representative for Campbell Advisors. In a meeting with a prospective client, the client inquires about investing in bonds denominated in Mexican pesos. Blank assures the client that Campbell can help him with Mexican fixed income investing. In fact, Blank had heard that his colleague, Jon Woller, might have had experience in Mexican bonds. The following day Blank learns that Woller had, in fact, no such experience. Blank does not correct his earlier statement and the prospective client invests with Campbell. Blank has:

A.only violated the Code and Standards when he learned that his statement was incorrect and did not contact the prospect to explain his error.

B.violated the Code and Standards, both when he misrepresented the qualifications of his firm and later, when he learned the truth and failed to contact the prospective client and correct his earlier statement.

C.not violated the Code and Standards because Blank did not intentionally mislead the prospect.

D.not violated the Code and Standards because Blank’s statements were verbal and not in writing.

点击查看答案

第10题

Question 5

Ralph Reed, CFA, is a portfolio manager at Parker Management, a U.S. equities manager. When clients inquire about fixed income portfolio management, Reed refers them to Ann Foster, who refers clients seeking U.S. equities management to Reed. For clients with an interest in international equities, Reed refers them to Global Advisors and receives $1,000 for each referral that opens an account with them. Which of the following best describes the action Reed must take regarding clients he refers to Parker or to Global?

A.If a referred client opens an account with Parker or with Global, Reed must disclose the arrangement with Parker or amount of the referral fee he receives from Global.

B.At the time he makes a referral to one of these advisors, Reed must disclose the amount of the referral fee from Global, but not the arrangement with Parker.

C.At the time he makes the referral, Reed must disclose the arrangement with Parker, the arrangement with Global, and the amount of the referral fee he receives from Global.

D.At the time he makes a referral, Reed must disclose that he will receive a referral fee from Global, but not the amount or the arrangement with Parker.

点击查看答案