Ethical and Professional Standards Q128

128Riya, CFA, a portfolio manager has two high net worth clients: Rita and Anita. The two clients are sisters and except a few asset classes, their portfolio holdings are the same. The sisters have received $200,000 each in inheritance. Both, Rita and Anita, have expressed interest in taking exposure in risky international equities, especially China. Anita also plans to buy a new house in the next 3- 4 months and needs to make a down payment of $450,000. Riya is aware of Anita‟s plans and her needs for liquidity. After a thorough research, Riya identifies a fund that has the potential to earn good returns in the next three years, and recommends it to Rita for investment. Has Riya violated any Standard by not recommending the fund to Anita?

Option : B
Explanation : Anita’s circumstances have changed and the down payment takes precedence. She cannot invest any surplus in risky investments now. Since the stock was not suitable, Riya did not recommend the fund. So, she did not violate any standard.

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