ALTDEV DURING IOE IN AN ACFT WITH LIMITED INTERCOM AND ALT ALERTING CAPABILITY.

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I WAS CONDUCTING IOE WITH A CANDIDATE WHO WAS ALMOST FINISHED. HE WAS ON HIS 4TH DAY; AND I HAD FLOWN WITH HIM BEFORE. HE WAS VERY GOOD. I GUESS I LET MY GUARD DOWN A LITTLE. WE WERE FLYING A CE402 USING A PORTABLE INTERCOM WHICH; WHEN HE; THE PLT; XMITTED I COULD NOT HEAR WHAT HE SAID. WE WERE FLYING FROM MVY-BOS FOR THE SECOND TIME THAT DAY. WE HAD RECEIVED A CLRNC TO 2000 FT FROM THE TWR; TO EXPECT 4000 FT. BEFORE WE LEFT MVY HAD DISCUSSED THE POSSIBILITY THAT WE WOULD CLB TO 5000 FT TO DO THE ILS RWY 15R CIRCLE RWY 4L IN BOS. USING 2ND XPONDER AS ALT REMINDER; WHICH I DO WHENEVER ONE IS AVAILABLE. (NO ALT ALERTERS IN CE402'S.) DEPARTED MVY INITIAL CLRNC 2000 FT EXPECT 4000 FT IN 10. CAPE DEP CLRED US TO AN ALT. PLT ACKNOWLEDGED (I COULDN'T HEAR WHAT HE ACKNOWLEDGED); AND PUT 5000 FT IN THE #2 XPONDER. I DID NOT QUESTION THIS. I ASSUMED HE HAD BEEN CLRED TO 5000 FT; NO REASON TO BELIEVE OTHERWISE; COMPETENT GUY AND WE HAD REASON TO BELIEVE 5000 FT WAS A POSSIBILITY GIVEN THE RWYS AND APCHS IN USE IN BOS. AFTER WE HAD BEEN LEVEL AT 5000 FT FOR ABOUT 2 OR 3 MINS; CAPE ASKED WHAT OUR ALT AND PLT REPLIED 5000 FT. CAPE SAID DSND IMMEDIATELY TO 4000 FT; THAT WAS YOUR CLRNC. PLT DSNDED. I CALLED CAPE ON THE PHONE LATER AND THEY SAID NOT TO WORRY THERE HAD NOT BEEN A CONFLICT. PLT AND I DISCUSSED HOW THIS HAPPENED; HE HAD BEEN ACCUSTOMED TO USING THE FIXED COMPASS CARD ON ADF AS AN ALT REMINDER BUT NOW WAS TRYING TO ADAPT TO USING 2ND XPONDER. HE HAD PUT 5000 FT IN JUST AS A POSSIBILITY FOR LATER BUT HAD 4000 FT IN THE ADF CARD. HE WAS TRYING TO DO IT 'MY WAY.' I BELIEVE THE FACT THAT THE ACFT HAD NO INSTALLED INTERCOM; WAS A HUGE CONTRIBUTING FACTOR IN THAT THE PORTABLE ONE MADE IT IMPOSSIBLE FOR ME TO HEAR THE PLT'S RADIO XMISSIONS. ALSO THAT THE PLT WAS VERY GOOD AND I HAD LET MY GUARD DOWN SOMEWHAT. IT'S REALLY NOT POSSIBLE TO ASK THE GUY TO REPEAT EACH ACKNOWLEDGEMENT HE HAS MADE ON THE RADIO TO ATC OVER THE INTERCOM SO I CAN MAINTAIN SURVEILLANCE.