Question

Under 12 CFR 9, a bank administering a common trust fund that has a defaulted fixed income asset in its portfolio: Must immediately write-off the asset against fund earnings. May buy the asset from the fund at cost or market value, whichever is higher, with the approval of the board. May purchase the asset after receiving the approval of the OCC. Must seek the approval of all fund participants before buying the asset from the fund.

1) Must immediately write-off the asset against fund earnings.
2) May buy the asset from the fund at cost or market value, whichever is higher, with the approval of the board.
3) May purchase the asset after receiving the approval of the OCC.
4) Must seek the approval of all fund participants before buying the asset from the fund.

Answer 1

Under 12 CFR 9, a bank administering a common trust fund that has a defaulted fixed income asset in its portfolio must immediately write-off the asset against fund earnings.

Step-by-step explanation:

Under 12 CFR 9, a bank administering a common trust fund that has a defaulted fixed income asset in its portfolio must immediately write-off the asset against fund earnings.

So, the correct option is: 1) Must immediately write-off the asset against fund earnings.