Ethics

Question 1

Suitability standard

Answer 1

Match between client return requirements and risk tolerances, and the characteristics of the securities recommended.

Question 2

Fiduciary standard

Answer 2

Stronger than Suitability standard, requires professionals to use their knowledge and expertise to act in the best interest of the client.

Question 3

External/Situational Influences

Answer 3

Example: social influence from others, Loyalty to employer ect. More important determinant of ethical quality of behavior than internal/personal.

Question 4

7 Standards of Professional Conduct

Answer 4

1) Professionalism
2) Integrity of Capital Markets
3) Duties to Clients
4) Duties to Employers
5) Investment Analysis, Recommendation & Actions
6) Conflicts of Interest
7) Responsibilities as a CFA Member/Candidate

Question 5

Ethical Decision Making Framework:

Answer 5

1) Identify: Relevant facts, stakeholders and duties owed, ethical principles, conflicts of interest.
2) Consider: Situational influences, additional guidance, alternative actions.
3) Decide and act.
4) Reflect: Was the outcome as anticipated? Why or why not?