Ethics

Question 1

The code of ethics 1)

Answer 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.

Question 2

The code of ethics 2)

Answer 2

Place the integrity of the investment profession and the interest of clients above their own personal interests.

Question 3

The code of ethics 3)

Answer 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.

Question 4

The code of ethics 4)

Answer 4

Practice and encourage others to practice in a professional and ethical manner that will reflect credit on themselves and the profession.

Question 5

The code of ethics 5)

Answer 5

Promote the integrity of and uphold the rules governing capital markets.

Question 6

The code of ethics 6)

Answer 6

Maintain and improve their professional competence and strive to maintain and improve the competence of other investment professionals.

Question 7

Standards of professional conduct

Answer 7

I. Professionalism
II. Integrity of capital markets
III. Duties to clients
IV. Duties to employers
V. Investment analysis, recommendations, and actions
VI. Conflicts of interest
VII. Responsibilities as a CFA Institute member or CFA candidate

Question 8

Standards of professional conduct: professionalism

Answer 8

A. Knowledge of the law. 
    -Follow more strict law
    -Reporting: direct => supervisor         or firm's compliance dept => dissociate from activity
B. Independence and objectivity. 
C. Misrepresentation. 
D. Misconduct.

Question 9

Standards of professional conduct: integrity of capital markets

Answer 9

A. Material nonpublic information.

B. Market manipulation

Question 10

Standards of professional conduct: duties to clients

Answer 10

A. Loyalty, prudence, and care. 
B. Fair dealing.
C. Suitability. 
D. Performance presentation. 
E. Preservation of confidentiality.

Question 11

Standards of professional conduct: duties to employers

Answer 11

A. Loyalty.
B. Additional compensation arrangements.
C. Responsibilities of supervisors.

Question 12

Standards of professional conduct: investment analysis, recommendations, and actions

Answer 12

A. Diligence and reasonable basis.
B. Communication with clients and prospective clients.
C. Record retention.

Question 13

Standards of professional conduct: conflicts of interest

Answer 13

A. Disclosure of conflicts.
B. Priority of transactions.
C. Referral fees.

Question 14

Standards of professional conduct: responsibilities as a CFA Institute member or CFA candidate

Answer 14

A. Conduct as members and candidates in the CFA program

B. Reference to CFA Institute, the CFA designation, and the CFA program

Question 15

Statement of compliance to the principles of the codes and standards

Answer 15

“[Insert name of party] claims compliance with the CFA Institute code of ethics and standards of professional conduct. This claim has not been verified by CFA Institute.”

Question 16

Misrepresentation

Answer 16

is any untrue statement or omission of a fact or any statement that is otherwise false or misleading.
Members must not represent any aspect of their practice (credentials, qualifications and services provided by their firm, their performance record, charachteristics of an investment)

Question 17

What is “Material” information?

Answer 17

Information is material if it would significantly alter the total mix of information currently available about a security in such a way that the price of the security would be affected.

Question 18

Mosaic theory

Answer 18

Under the “mosaic theory,” financial analysts are free to act on collection of public and nonmaterial nonpublic information, or mosaic, without risking violation.