Chartered Market Technician (CMT) Practice Exam

Accepting the gift and disclosing it to their employer is the appropriate action for a portfolio manager in this scenario. This approach upholds ethical standards and maintains transparency in the relationship between the manager and their client as well as within the organization. By disclosing the gift, the portfolio manager ensures that there is no conflict of interest or perception of impropriety, which is crucial in maintaining the integrity of the financial services industry.

Moreover, many firms have clear policies outlining how to manage gifts from clients, often specifying that any gifts above a certain value must be disclosed. Adhering to these policies protects both the client and the portfolio manager, fostering trust and accountability.

In contrast, returning the gift immediately could potentially harm the client relationship, while accepting it without disclosure could lead to ethical violations and undermine the trust placed in the portfolio manager. Politely declining the gift could also be seen as rejecting the client's goodwill, which may not be necessary or advisable depending on the context and the firm's policies.