CH10. Ethics Flashcards
The Code of Ethics specifically addresses all of the following EXCEPT:
(a) competence.
(b) integrity and dignity.
(c) independent judgment.
(d) importance of contractual obligations
(d) importance of contractual obligations
Which of the following refers to the obligation of an investment services firm executing on behalf of customers to ensure that the prices those orders receive reflect the optimal mix of price improvement, speed and likelihood of execution?
(a) Customer Account Information
(b) Best Execution
(c) Account Opening
(d) Broker Quotation System
(e) None of the above
(b) Best Execution
The following statements refer to cases when a broker dealer salesman can disclose customer information, EXCEPT:
(a) The information concerns illegal activities on the part of the client or prospective client
(b) Disclosure is required by law
(c) The client or prospective client permits disclosure of the Information
(d) The supervisor of the broker dealer allows it
(e) None of the above
(d) The supervisor of the broker dealer allows it
All of the following are responsibilities of a Salesman, EXCEPT:
(a) Possess and pursue knowledge of Law
(b) Guaranty returns
(c) Maintain objectivity and independence
(d) Demonstrate integrity, honesty and professional competency
(e) None of the above
(b) Guaranty returns
All of the following are responsibilities of a Salesman, EXCEPT:
(a) Make a reasonable inquiry into a client’s or prospective clients’ investment experience, risk and return objectives, and financial constraints
(b) Disclose material nonpublic information that could affect the value of an investment to others with an advice to act on the information.
(c) Determine that an investment is suitable to the client’s financial situation and consistent with the client’s written objectives
(d) None of the above
(b) Disclose material nonpublic information that could affect the value of an investment to others with an advice to act on the information.
Place the following investment transactions from highest priority to lowest:
I. salesman’s transaction as a beneficial owner
II. client transaction
III. employer’s transaction
(a) I, II, III
(b) II, I, III
(c) III, II, I
(d) II, III, I
(d) II, III, I
The following are standards of professional conduct, EXCEPT:
(a) Place the integrity of the investment profession and the interests of clients above their own personal interests
(b) Maintain and improve their professional competence and strive to maintain and improve the competence of other investment professionals
(c) Act with integrity, competence, diligence, respect, and in an ethical manner with the public, clients, prospective clients, employers, employees, colleagues in the investment profession, and other participants in the global capital markets.
(d) Use personal judgment when conducting investment analysis and making investment recommendations even if different from the Company’s recommendation
(d) Use personal judgment when conducting investment analysis and making investment recommendations even if different from the Company’s recommendation
Ray is a registered fixed income salesman and is in the process of taking his certification exam to be an equities salesman. Rose, his client, asks him for recommendations about the stock of Bank X. Ray should:
(a) Conduct equity research about Bank X and provide Rose with his findings and recommendations
(b) Recommend the purchase of the stock of Bank X since it is performing well
(c) Inform Rose not to purchase the stock of Bank X since he is not aware of the performance of Bank X
(d) Refer Rose to an investment professional who is registered as an equities salesman
(e) None of the above
(d) Refer Rose to an investment professional who is registered as an equities salesman
According to AIMR Code of Ethics members must act with integrity, competence, dignity and in an ethical manner when dealing with:
(a) Regulatory bodies
(b) Exchanges
(c) Public only
(d) Public and clients
(e) All of the above
(d) Public and clients
Members of the Association for Investment Management and Research shall:
(a) Act with due diligence, professionalism and in a responsible manner
(b) Practice and encourage others to practice in as efficient a manner as possible
(c) Strive to maintain and improve their client wealth
(d) Use reasonable care and exercise independent professional judgment
(e) All of the above
(d) Use reasonable care and exercise independent professional judgment
Conrad is due to leave his current employment as a stockbroker in order to set up his own business. Whenever he talks to clients he signs off by telling them that he will shortly be leaving the firm, and that he will be unable to talk about his new venture until after his resignation becomes effective. Has Conrad violated the Code and Standards?
(a) Yes, by mentioning the fact he was leaving
(b) Yes, by entering into a business in competition with his current employer
(c) No, as he has done nothing to induce the clients
(d) No, as an employee is permitted to talk freely with clients in the time between tendering of resignation and it becoming effective.
(e) None of the above
(c) No, as he has done nothing to induce the clients
The following are duties of a Registered person to clients, Except:
(a) Fair Dealing
(b) Preservation of Confidentiality
(c) Provide Material nonpublic information
(d) Determine suitability of investment to client’s financial situation
(e) None of the above
(c) Provide Material nonpublic information
Eric is a registered salesman of fixed income securities. He wants to invest Php 1 million in a 5 year Philippine Treasury Note. During the day, his client calls up and puts an order to buy Php 9 million of 5 year Philippine Treasury Note at market until filled. He places an order to buy Php 10 million of the said 5 year note and was able to buy Php 5 million at a price of 98. After a second, the balance of Php 5 million was executed at 98.25. What was the price of the note Eric purchased?
(a) 98.25
(b) 98.00
(c) Eric’s order was not executed
(d) 98.125
(a) 98.25
Emir provided his client with a recommendation to buy PLDT’s peso denominated bond with a remaining life of 3.5 years at a price of 102. After 6 months, the price of the said bond rose to 108 and the client sold the bond to recognize the profit. Ecstatic, the client gave Emir php 5,000 for giving him the recommendation. Emir should:
(a) Accept the money and inform his supervisor
(b) Accept the money
(c) Decline the money
(d) Accept the money and turn it over to his supervisor
(e) None of the above
(c) Decline the money
With regard providing clients with information, which among the following is not required under the SRC rule:
(a) Client Agreement
(b) Transaction Confirmation
(c) Financial condition of broker dealer (upon request of client)
(d) List of Management Officers (upon request of client)
(e) Customer account statement
(d) List of Management Officers (upon request of client)
