Ethics and Trust in the Investment Profession

Question 1

In a 2016 study on trust, investors indicated that

to earn their trust, the top two attributes of an investment manager should be that

Answer 1

(1) has transparent and open business practices, and (2) has ethical business practices.

Question 2

individuals or groups
of individuals who could be affected either directly or indirectly by a decision and
thus have an interest, or stake, in the decision

Answer 2

stakeholders

Question 3

a set of moral principles and rules of conduct that provide

guidance for our behavior

Answer 3

Ethics

Question 4

beliefs regarding what is good, acceptable, or obligatory behavior and what is bad, unacceptable, or forbidden behavior

Answer 4

Moral principles or ethical principles

Question 5

behavior that follows moral principles and balances self-interest
with both the direct and the indirect consequences of the behavior on others

Answer 5

Ethical conduct

Question 6

a written set of principles

Answer 6

code of ethics

Question 7

explicit rules or standards that identify specific

behaviors required of community members.

Answer 7

standards of conduct

Question 8

an occupational community that has specific education, expert knowledge, and a framework of practice and behavior that underpins community trust, respect, and recognition.

Answer 8

profession

Question 9

the publication of
_________ was an important step in establishing
a body of knowledge for investment.

Answer 9

, the publication of

Graham and Dodd’s Security Analysis in 1934 was an important step in establishing a body of knowledge for investment.

Question 10

“to lead the investment profession globally, by
promoting the highest standards of ethics, education, and professional excellence for
the ultimate benefit of society.”

Answer 10

mission of CFA Institute

Question 11

The _______________ promote the integrity of charterholders and establish a model for ethical behavior.

Answer 11

CFA Institute Code of Ethics and Standards of
Professional Conduct (Code and Standards)

Question 12

Where client interests and market interests conflict, the

Code and Standards set an investment management professional’s duty to ________ as the overriding obligation

Answer 12

market integrity

Question 13

external factors, such as environmental or cultural elements, that shape our thinking, decision making, and behavior

Answer 13

Situational influences

Question 14

Ethical Decision-Making Framework

Answer 14

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