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Question:

Judy Blush is a CFA candidate and is recommending the purchase of a mutual fund that invests solely in long-term U.S. Treasury bonds (T-bonds) to one of her clients. She states that, “Since the U.S. government guarantees payment of both the bond’s principal and interest, risk of loss with this investment is virtually zero.” Blush’s actions violated:

A the Standard on misrepresentation.
Explaination

Government bonds are default risk free bur are subject to price risk. Thus, Blush misrepresented the expected performance of the fund and therefore violated Standard 1(C) Misrepresentation.