Prudent Investor Rule (PIR) investment decision based on _____ which is measured by ________.

Prudent vs imprudent?

Under the PIR no particular investment is either prudent or imprudent. The decision is made based upon return vs. risk, where risk is measured by the asset’s impact on the portfolio.

The PMR concept originated with the:

1830 court case of Harvard College vs. Amory

Understanding and complying with all applicable laws, rules, and regulations

CFA Institute Code of Ethics (all components)

Strive to maintain and improve the competence of others in the profession.

Practice and encourage others to practice in a professional and ethical manner that will reflect credit on members and their profession.

 all accounts that have expressed an interest in the issue shall receive m/n fraction of their indication of interest, where there are m shares available and indications of interest for n shares.

Most important aspects of Prudent Man Rule (PMR) (2)

Using caution and being conservative in the selection of investments.

Imprudents classes of securities under the Prudent Man Rule (PMR) (3):

options, futures, IPOs

Members and candidates shall not engage in any conduct or commit any act that compromises the integrity of the CFA designation or the integrity or validity of the examinations leading to the award of the right to use the CFA designation.

Members shall not copy or use, in substantially the same form as the original, material prepared by another without acknowledging and identifying the name of the author, publisher, or source of such material. Members may use, without acknowledgment, factual information published by recognized financial and statistical reporting services or similar sources.

The Prudent Man Rule (PMR) considers risk (independent of/relative to) return.

The PMR considers risk independent of return

The Prudent Investor Rule (PIR) considers risk (independent of/relative to) return

The PIR considers risk relative to return.