CFA Level 1 Exam

3959 Questions

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Question No. 1

Michelieu tells a prospective client, "I may not have a long-term track record yet, but I'm sure that you'll be very  pleased with my recommendations and service. In the three years that I've been in the business, my equity-

oriented clients have averaged a total return of more than 26 percent a year." The statement is true, but Michelieu only has a few clients and one of his clients took a large position in a penny stock (against Michelieu's advice) and realized a huge gain. This large return caused the average of all of Michelieu's clients to exceed 26 percent a year. Without this one investment, the average gain would have been 8 percent a year. Has Michelieu violated the Standards?
Choose the correct option from the given list.
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