CODE OF ETHICS AND STANDARDS OF PROFESSIONAL CONDUCT, GUIDANCE FOR STANDARDS I–VII

Question 1

Identify the different components in the CFA code of ethics

Answer 1

1. 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.
2. Place the integrity of the investment profession and the interests of clients above their own personal interests.
3. Use reasonable care and exercise independent professional judgment when conducting investment analysis, making investment recommendations, taking investment actions, and engaging in other professional activities.
4. Practice and encourage others to practice in a professional and ethical manner that will reflect credit on themselves and the profession.
5. Promote the integrity and viability of the global capital markets for the ultimate benefit of society.
6. Maintain and improve their professional competence and strive to maintain and improve the competence of other investment professionals.

Question 2

What are the different components of the PROFESSIONALISM standards ?

Answer 2

1. Knowledge of the Law
2. Independence and Objectivity
3. Misrepresentation
4. Misconduct
5. Competence

Question 3

What are the different components of the INTEGRITY OF CAPITAL MARKETS standards ?

Answer 3

1. Material non public information
2. Market Manipulation

Question 4

What are the different components of the DUTIES TO CLIENTS standards ?

Answer 4

1. Loyalty, prudence and care

2.Fair Dealing

3.Suitability

4.Performance presentation

5. Preservation of Confidentiality

Question 5

What are the different components of the DUTIES TO EMPLOYER standards ?

Answer 5

1. Loyalty
2. Additional Compensation Arrangements
3. Responsibilities of Supervisors

Question 6

What are the different components of the INVESTMENT ANALYSIS, RECOMMENDATIONS, AND ACTIONS standards ?

Answer 6

1. Diligence and Reasonable Basis
2. Communication with Clients ands Prospective Clients
3. Record Retention

Question 7

What are the different components of the CONFLICTS OF INTEREST standards ?

Answer 7

1. Avoid or disclose conflicts
2. Priority of transaction
3. Referral Fees

Question 8

What are the different components of the RESPONSIBILITIES AS A CFA INSTITUTE MEMBER OR CFA CANDIDATE standards ?

Answer 8

1. Conduct as Participants in CFA Institute Programs
2. Reference to CFA Institute, the CFA Designation, and the CFA Program.

Question 9

For someone who is related to plagiarism, what standards is he violating ?

Answer 9

Profesionnalism standards –> misrepresentation

Question 10

Compare additional compensation arrangements vs a gift from a client

Answer 10

If a client offers a bonus that depends on the future performance of her account, this is an additional compensation arrangement that requires written consent in advance.

If a client offers a bonus to reward a member for her account’s past performance, this is a gift that requires disclosure to the member’s employer to comply with Standard I(B) Independence and Objectivity.

Question 11

What are the components of the Asset Manager Code of Professional Conduct

Answer 11

Loyalty to Clients

Investment Process and Actions

Trading

Disclosure

Risk Management, Compliance and Support

Performance and Valuation

Question 12

Identify the different component that should be included in a business continuity plan to deal with disasters

Answer 12

• Back (preferably offsite) of account information
• Plans to monitor, analyze, and trade investments
• Communication plan with key vendors and suppliers
• Employee communication and coverage of key business functions
• Client communication plans