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Answer: Recommend Torex to a client, but she must disclose her investment in Torex to the client.
## Explanation According to the GARP Code of Conduct, when an investment professional has a personal investment in a security they are recommending to clients, they **must disclose this conflict of interest** to the client. Key points: - Burns has conducted thorough research and believes Torex is undervalued - She has a personal investment in Torex - The GARP Code requires disclosure of such conflicts - Option C correctly states she can recommend Torex but must disclose her investment - Options A and B are too restrictive - she can recommend it with proper disclosure - Option D is incorrect because disclosure is required regardless of suitability This ensures transparency and allows clients to make informed decisions while understanding the advisor's potential bias or conflict of interest.
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Isabelle Burns, FRM, is an investment advisor for a firm whose client base is composed of high net worth individuals, in her personal portfolio, Burns has an investment in Torex, a company that has developed software to speed up Internet browsing. Burns has thoroughly researched Torex and believes the company is financially strong yet currently significantly undervalued. According to the GARP Code of Conduct, Burns may:
A
Not recommend Torex as long as she has a personal investment in the stock.
B
Not recommend Torex to a client unless her employer gives written consent to do so.
C
Recommend Torex to a client, but she must disclose her investment in Torex to the client.
D
Recommend Torex to a client without disclosure as long as it is a suitable investment for the client.
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