Social Factors in CFA Level 1 Exam: Key Concepts and Analysis

Understanding Social Factors in CFA Level 1 Exam

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Question

Social factors -

Answers

A. none of these answers.

B. must be a primary consideration of investments because of the ERISA rule.

C. may never be a primary consideration of investments.

D. may be a primary consideration of investments, depending on the guidelines of the investment policy.

E. must be a primary consideration of investments because of the prudence rule.

F. must be a primary consideration of investments because of the loyalty rule.

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Explanations

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A. B. C. D. E. F.

ERISA guidelines issued by the U.S. Department of Labor state that ERISA prudence standard requires a fiduciary to make investment decisions first on grounds of economic and investment merit. Consideration of social factors may be an incidental, but never primary, consideration of investments that are equal in economic and financial terms.

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