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Answer: Yes, Lee has violated both the Standard relating to suitability and the Standard relating to loyalty, prudence, and care.
**Explanation:** Grace Lee has violated both **Standard III(C): Suitability** and **Standard III(A): Loyalty, Prudence, and Care**. 1. **Standard III(C): Suitability** requires that investment recommendations or actions align with the client's financial situation, objectives, and constraints. Lee ignored the client's mandate for an equal-weighted portfolio, thereby violating this standard. 2. **Standard III(A): Loyalty, Prudence, and Care** mandates that members act with reasonable care and exercise prudent judgment, adhering to client guidelines. Lee's failure to rebalance the portfolio, despite the client's specified strategy, constitutes a violation of this standard. Thus, Lee's actions are in breach of both standards, making **Option C** the correct answer.
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Grace Lee, CFA, is an investment advisor whose client's investment policy statement specifies an equal-weighted portfolio of consumer durables, clean energy, and technology stocks. Due to superior performance, the portfolio has become significantly overweight in technology stocks. Lee expects this trend to continue for another year and decides against rebalancing. Has Lee violated any CFA Institute Standards?
A
No, Lee has not violated any Standards.
B
Yes, Lee has violated only the Standard relating to suitability.
C
Yes, Lee has violated both the Standard relating to suitability and the Standard relating to loyalty, prudence, and care.
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