Chapter 2 book test Flashcards
Which of the following is NOT one of the elements of the CFA Code of ethics, relating to investment professionals?
A) 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 participant in the global market markets
B) Communicate clearly with the public, clients and prospective clients, ensuring additional care is taken when recommending derivative related products
C) promote the integrity and viability of the global capital markets for the ultimate benefit of society
D) maintain and improve their professional competence and strive to maintain and improve the competence of other investment professionals
B) Communicate clearly with the public, clients and prospective clients, ensuring additional care is taken when recommending derivative related products
(B) is requirement for firms under financial Conduct Authority (FCA) rules, it is not an element of the CFA code of ethics
the CFA Code and Standards requires investment professionals to adhere to all applicable regulatory requirements in the country in which they are working. when there is conflict between these country requirements and the CFA Code and standards, which should be followed ?
A) The CFA Code and standards
B) The Applicable regulatory requirements in that country
C) whichever is the stricter of the CFA code and standards, and the applicable regulatory requirements in that country
D) whichever the investment professional feel most appropriate once all factors have been considered
C) whichever is the stricter of the CFA code and standards, and the applicable regulatory requirements in that country
when there is a conflict between applicable regulatory requirements and the code of standards, they must follow whichever is the strictest.
AN investment professional who is an employee at a large investment firm also wishes to undertake independent practice away from their employer. what requirements are laid down by the CFA Code and Standards?
A) the investment professional must obtain prior permission from their employer before undertaking independent practice
B) the investment professional is forbidden from undertaking independent practice
C) the investment professional must obtain prior permission from the financial regulator before undertaking independent practice
D) the investment professional may undertake independent practice without notifying their employer, so long as their employer’s best interest are always put first
A) the investment professional must obtain prior permission from their employer before undertaking independent practice
An analyst writing a research report covering the aerospace industry is focusing on a company which produces wing components for passenger planes. they believe the company is about to win a huge contract with a major plane manufacturer. they write, ‘given the fact that the company will soon sign a major manufacturer, the company is rated as a ‘buy’. in writing this, the analyst has:
A) Not violated any CFA standards of professional conduct
B) violated the CFA standard on professionalism
C) violated the CFA standard on investment analysis, recommendations and actions
D) violated the CFA standard on duties to clients
C) violated the CFA standard on investment analysis, recommendations and actions
there is a requirement to distinguish between fact and opinion in the presentation of investment analysis and recommendation. in this case this, the buy recommendation is an opinion.
Jack requests that his broker, Sarah, buys shares in ABC plc. before placing the order, Sarah purchases abc shares for her own personal dealing. In doing so, she has:
A) not violated any CFA standards of professional conduct
B) violated the CFA standard on integrity of capital markets
C) violated the CFA standard on duties to employers
D) violated the CFA standard on conflict of interest
D) violated the CFA standard on conflict of interest
Mike is a broker who believes that a major client is embezzling money from is employers and investment it in securities for a personal account. Under CFA Standard III(E), Mike should:
A) not report his suspicion to anyone as he has a dusty of confidentiality
B) Freeze all funds and assets belonging to his clients
C) complete all outstanding trades but decline to carry out any further trades
D) consult his compliance department to determine what regulatory action is required
D) consult his compliance department to determine what regulatory action is required
the CFA standard III states that members and Candidates must keep information about current, former and prospective client confidential unless;
a) information concerns illegal activates
b) disclosure is requirement by law
c) client or prospective client permits disclosure of the information
