Answer: Yes, by buying the Japanese bank stock

## Explanation Petrov's actions **violate** the Standard relating to suitability because: - **CFA Institute Standard III(C) - Suitability** requires that members must: 1. Make investment recommendations that are suitable for the client's financial situation, investment objectives, and constraints 2. Follow the client's investment mandate and constraints - **Violation analysis**: - **Canadian bank stock purchase**: This action does NOT violate the suitability standard because: - The fund's mandate requires investment in the Canadian large-cap financial services sector - The mandate also requires the fund to be fully invested - Petrov is making the best available choice within his constrained investment universe - He is acting within the fund's stated mandate and constraints - **Japanese bank stock purchase**: This action DOES violate the suitability standard because: - The fund's mandate specifically restricts investments to the **Canadian** large-cap financial services sector - A Japanese bank stock falls outside the geographic and sector constraints of the fund's mandate - Even though the investment may be attractive from an investment perspective, it violates the client's stated investment policy - **Key principle**: Investment managers must adhere to the client's investment policy statement and constraints, even when they believe better opportunities exist outside those constraints **Correct Answer: B** - Yes, by buying the Japanese bank stock

Author: LeetQuiz Editorial Team