Quiz
Ethics
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Fragen in diesem Quiz (93)
1Which of the following best identifies an internal trait that may lead to poor ethical decision making?
- AOverconfidence
- BLoyalty to employer
- CPromise of money or prestige
2Situational influences in decision making will most likely be minimized if:
- Astrong compliance programs are in place.
- Blonger-term consequences are considered.
- Cindividuals believe they are truthful and honest.
3Decision makers who use a compliance approach are most likely to:
- Aavoid situational influences.
- Boversimplify decision making.
- Cconsider more factors than when using an ethical decision-making approach.
4Which of the following statements clearly conflicts with the recommended procedures for compliance presented in the CFA Institute Standards of Practice Handbook?
- AFirms should disclose to clients the personal investing policies and procedures established for their employees.
- BPrior approval must be obtained for the personal investment transactions of all employees.
- CFor confidentiality reasons, personal transactions and holdings should not be reported to employers unless mandated by regulatory organizations.
5Scott works for a regional brokerage firm. He estimates that Walkton Industries will increase its dividend by US$1.50 a share during the next year. He realizes that this increase is contingent on pending legislation that would, if enacted, give Walkton a substantial tax break. The US representative for Walkton’s home district has told Scott that, although she is lobbying hard for the bill and prospects for its passage are favorable, concern of the US Congress over the federal deficit could cause the tax bill to be voted down. Walkton Industries has not made any statements about a change in dividend policy. Scott writes in his research report, “We expect Walkton’s stock price to rise by at least US$8.00 a share by the end of the year because the dividend will increase by US$1.50 a share. Investors buying the stock at the current time should expect to realize a total return of at least 15% on the stock.” According to the Standards:
- AScott violated the Standards because he used material inside information.
- BScott violated the Standards because he failed to separate opinion from fact.
- CScott violated the Standards by basing his research on uncertain predictions of future government action.
6Rule has worked as a portfolio manager for a large investment management firm for the past 10 years. Rule earned his CFA charter last year and has decided to open his own investment management firm. After leaving his current employer, Rule creates some marketing material for his new firm. He states in the material, “In earning the CFA charter, a highly regarded credential in the investment management industry, I further enhanced the portfolio management skills learned during my professional career. While completing the examination process in three consecutive years, I consistently received the highest possible scores on the topics of Ethics, Alternative Investments, and Portfolio Management.” Has Rule violated Standard VII(B)–Reference to CFA Institute, the CFA Designation, and the CFA Program in his marketing material?
- ARule violated Standard VII(B) in stating that he completed the exams in three consecutive years.
- BRule violated Standard VII(B) in stating that he received the highest scores in the topics of Ethics, Alternative Investments, and Portfolio Management.
- CRule did not violate Standard VII(B).
7Stafford is a portfolio manager for a specialized real estate mutual fund. Her firm clearly describes in the fund’s prospectus its soft dollar policies. Stafford decides that entering the CFA Program will enhance her investment decision-making skill and decides to use the fund’s soft dollar account to pay the registration and exam fees for the CFA Program. Which of the following statements is most likely correct?
- AStafford did not violate the Code and Standards because the prospectus informed investors of the fund’s soft dollar policies.
- BStafford violated the Code and Standards because improving her investment skills is not a reasonable use of the soft dollar account.
- CStafford violated the Code and Standards because the CFA Program does not meet the definition of research allowed to be purchased with brokerage commissions.
8After investigation, if the member or candidate does not accept the charges and proposed sanction, the matter is referred to
- AProfessional Conduct staff only
- BBoard of Governors
- CA panel composed of DRC members
9Steven Kobren, who has taken her level II exam, was suspended to have violated testing rules on exam day. The Professional Conduct staff will conduct investigation later on that may not include:
- Aasking her to submit a written explanation.
- Bsuspending from participation in the CFA Program
- Ccollecting all relevant documents and records
10Which of the following is not a part of the CFA Institute Code of Ethics?
- AMaintain and improve their professional competence and strive to positively affect other investment professionals.
- BInvestment transactions for clients and employers must have priority over transaction in which a member or candidate is the beneficial owner.
- CUse reasonable care and exercise independent professional judgement when conducting investment analysis, making investment recommendations, taking investment actions.
11Harris Kim, CFA, practices in the developed country of Oldasia as well as in the emerging country of Newasia. By regulation, Oldasia prohibits from trading in securities ahead of their clients. Newasia has no laws or regulations. Kim may:
- ATrade ahead of their clients in Newasia only, as long as full disclosure has been made to clients.
- Bnot trade ahead of their clients in Oldasia only.
- Cnot trade ahead of their clients in either country.
12White Rods, CFA, is a famous portfolio manager at Man Group. Due to the prominence of his position, he is often invited to attend free marketing events. Unlimited Horizons, has invited Perez to attend such free events and make an informal speech which could educate and inform investment community, as well as help Rods maintain his CFA designation. Rods should most likely:
- Adecline to attend the event as it could result in a violation of Standard I (B) "Independence and Objectivity"
- Baccepts the invitation as no cash compensation is involved
- Cdecline to attend the event as it could result in a violation of Standard I (D) "Misconduct"
13Clark, CFA, is a fixed-income portfolio manager at CG pension fund, is preparing a research report in order to help CG develop a diversified funding base. In preparing the report, he uses materials from many sources, such as factual information published by Moody's Investors Service without acknowledgement, some charts&graphs from unrecognizable Finance website without stating their sources, etc. Clark has:
- Aviolated standard V (A) because he did not make sure that the information in these charts&graphs is accurate.
- Bviolated standard I (C) because he did not state the source of these charts&graphs
- Cnot violated standard I (C) because these charts&graphs are widely available on the website.
14Jack Li, CFA level 3 candidate, is working in Golden Finance as financial analyst. He is currently writing a report about a small internet company. During the trip to the company, the company provide Jack fair meal and transportation, and Jack as consumption receipts in order to increase the trip expense. The expenses incurred during the trip are covered by Jack's employer. Does Jack violate the Standard I (D), Misconduct?
- ANot violation, since Jack does not apply for reimbursement yet.
- BViolation of standard, because the reputation has been compromised.
- CNot violation, because the amount is not big enough to compromise his reputation.
15Which of following is most likely to be a market manipulation under Standard II (B): Market Manipulation?
- ABob William, an internet security commentator is artificial posting positive commons in order to inflate stock price
- BOne of a hedge fund hold a large portion of a stock, in order to liquidate the position, fund manager sell the stock next day, causing stock price decrease sharply.
- CIn order to increase the liquidity of stock, controlling position shareholder sell the stock in secondary market.
16Sarah Taylor, is a financial analyst, who writes recommendation report for public company. When she finished the report, she uses different method sending the recommendation to her clients. She firstly goes to the post, and send the report to her clients who does not have email information, two days later, she sends the report by email to the rest of her clients. Does Sarah's action violate the Standard III (B) : Fair Dealing?
- ASarah's difference methods have violate the standard, because, she has treated clients differently.
- BNo, she did not violate the standard.
- CSarah have violated the standard, because she should send the report simultaneously.
17David Wabe is an asset manager in Universe Finance, recently, there is a hot issue, he use client' asset participating this hot issue. To comply with Standard III (B), Fair Dealing, what is appropriate way to allocate trades?
- ABased on the size of compensation for the firm, but make full disclosure.
- BPro-rate method to allocate the trade to suitable account.
- CEqually allocate to each suitable account.
18Josie is a stock broker in First win security corporation. Susan is a college graduate who never buy stock before. When Susan contact Josie, Josie said, you never need to worry about the stocks I recommended for you, because several our best analysts have done the report in entire industry. Does Josie recommendations violate Standard III (C): Suitability
- ANot if Josie said the truth
- BYes, Josie have failed to determine whether the recommendations are suitable for the client
- CNo, if Josie's recommendation is in the best interest of client, she is not in violation.
19Which of the following is the most accurate description in the Standard III (D): Performance Presentation?
- AThe GIPS standard is required to comply.
- BThe GIPS standard is the recommended standard for the firm to comply
- CFirms can comply part of GIPS in their procedure.
20Will Li, CFA, is a fund manager that managing many client portfolio, during the last year, he generated above normal return for his clients. During a phone call with his client, Sally. He said "based on late year return I earned for you, you can refer your friend to me". Is this violation of Standard III (D), Performance Presentation.
- ANo, if what Will say is true.
- BYes, because Will does not present return in a complete way.
- CYes, because what Will say about return is wrong.
21Angela Zhang, CFA Level III candidate, sat in the June CFA Level III exam. After exam, she posted on social media to share her excitement. Angela was ware that Standard VII (A) requires CFA candidates not to discuss the contents of exam, thus she only discuss the topics that were not in the exam. She posts " ...it is lucky that GIPS was ignored. The important implementation shortfall was not on the exam..." Angela is least likely:
- Ain violation even if the information about the actual exam contents was posted after the exam.
- Bin violation of Standard VII (A) Responsibilities as a CFA Institute Member or CFA for providing information about the exam.
- Cnot in violation because the information was only about what was not on the exam.
22Alan Dicken is a CFA Level II candidate sit in next year's exam. He asks his friend Josie Somerset, CFA Level III candidate, about the CFA exam whether DCF tested much in this year's exam or not. Josie refused to share specific questions in the exam, but she said: " Financial statement analysis and Economics were tested much more than I expected." Which of the following is most accurate?
- ANeither Alan nor Josie have violated the Standards.
- BBoth Alan and Josie have violated the Standards.
- CAlan has violated the Standards but Josie has not.
23Zoe Ong, CFA, is a Senior Quantitative Trader in Millemium & Co, a hedge fund. She received two cover letters from Angel and David, who were applying an analyst role. Angel wrote "I passed all three levels of CFA in first try and awarded CFA degree this last year." While David states " As a CFA charter holder, I am confident that the expertise with CFA puts me among an elite group of analysts from which employers can expect superior performance". Which of the following statements is CORRECT?
- ADavid has violated Standard VII (B), but Angel did not.
- BNeither Angle nor David has violated Standard VII (B)
- CBoth Angel and David has violated Standard VII (B)
24Which of the following is most likely to be a requirement for a investment company claiming with Global Investment Performance Standards?
- AWhen cooperate with a non-compliant firm, the compliant firm should be clearly defined as separate from the non-compliant firm.
- BAll discretionary portfolio of the firm must be included in at least one composite, regardless of the fee arrangements.
- CThe firm may not claim compliance with GIPS until it has recorded at least five years of GIPS - compliant performance data.
25Nikuman Investment & Co. is a multinational investment company headquartered in Japan. Nikuman also has business in China. When Nikuman is reporting GIPS for the current year, it find that some GIPS standards conflicts Japan and China report regulation. Nikuman should most likely:
- Acomply with either GIPS standards or Japan and China local regulation, whichever is stricker.
- Breport in compliance with the local regulation and make full disclosure of the conflict.
- Ccomply with the GIPS standard and make full disclosure of the conflict.
26One of the challenges to engaging in ethical conduct is that decision makers often fail to recognize and/or significantly underestimate the effect of situational influences. Which of the following statements is least accurate in terms of situational influences?
- ASituational influences shift our brain's focus from the short or immediate term to the long term.
- BBonuses, prestige, and loyalty to employer are examples of situational influences that frequently have a disproportionate weight in our decision making.
- CSituational influences can induce people to act more ethically.
27Colin Gifford, CFA, is finalizing a monthly newsletter to his clients, who are primarily individual investors. Many of the clients’ accounts hold the common stock of Capricorn Technologies. In the newsletter, Gifford writes, “Based upon the next six month’s earnings of $1.50 per share and a 10% increase in the dividend, the price of Capricorn’s stock will be $22 per share by the end of the year.” Regarding his stock analysis, the least appropriate action Gifford should take to avoid violating any CFA Institute Standards of Professional Conduct would be to:
- Aseparate fact from opinion.
- Binclude earnings estimates.
- Cidentify limitations of the analysis.
28Which of the following statements does not accurately represent the GIPS standards concerning the fundamentals of compliance? GIPS standards:
- Apromote fair competition amongst investment management firms in all markets requiring a common fee structure.
- Bensure consistent, accurate investment performance data in areas of reporting, records, marketing, and presentations.
- Cobtaining global acceptance of calculation and presentation standards in a fair, comparable format with full disclosure.
29Which of the following statements related to why the GIPS standards were created is least likely correct? GIPS standards were created to:
- Aprovide clients certainty in what is presented and allow them to make reasonable comparisons.
- Bidentify a set of ethical principles for firms to follow in calculating and presenting historical investment results.
- Cestablish a standardized, industry wide approach for investment firms to follow.
30Which of the following statements concerning the Global Investment Performance Standards (GIPS) is most likely correct?
- AClients or prospective clients benefit from the Standards because the historical track record of compliant firms is accurate and precise.
- BThe Standards eliminate the need for in-depth due diligence by investors.
- CCompliance with the Standards enhances the credibility of investment management firms.
31Dilshan Kumar, CFA, is a world-renowned mining analyst based in London. Recently he received an invitation from Cerberus Mining, a London Stock Exchange listed company with headquarters in Johannesburg, South Africa. Cerberus asked Kumar to join a group of prominent analysts from around the world on a tour of their mines in South Africa, some of which are in remote locations, not easily accessible. The invitation also includes an arranged wildlife safari to Krueger National Park for the analysts. Kumar accepts the invitation planning to visit other mining companies he covers in Namibia and Botswana after the safari. To prevent violating any CFA Institute Standards of Professional Conduct, it is most appropriate for Kumar to only accept which type of paid travel arrangements from Cerberus?
- AGround transportation to Krueger National Park.
- BEconomy class round trip ticket from London to Johannesburg.
- CFlights on a private airplane to the remote mining sites in South Africa.
32Charles Mbuwanga, a Level III CFA Candidate, is the Business Development Manager for Sokoza Investment Group, an investment management firm with high-net-worth retail clients throughout Africa. Sokoza introduced listed Kenyan Real Estate Investment Trusts (REITs) to its line of investment products based on new regulations introduced in Kenya so as to diversify its product offering to clients. The product introduction comes after months of researching Kenyan property correlations with other property markets and asset classes in Africa. Sokoza assigns Mbuwanga as part of the sales team in introducing this product to its clients across Africa. Mbuwanga subsequently determines that most of Sokoza’s clients’ portfolios would benefit from having a small Kenyan property exposure to help diversify their investment portfolios. By promoting the Kenyan REITS for Sokoza’s client portfolios as planned, Mbuwanga would least likely violate which of the following Standards?
- ASuitability
- BKnowledge of the Law
- CIndependence and Objectivity
33When Abdullah Younis, CFA, was hired as a portfolio manager at an asset management firm two years ago and was told he could allocate his work hours as he saw fit. At that time, Younis served on the board of three nonpublic golf equipment companies and managed a pooled investment fund for several members of his immediate family. Younis was not compensated for his board service or for managing the pooled fund. Younis’ investment returns attract interest from friends and co-workers who persuade him to include their assets in his investment pool. Younis recently retired from all board responsibilities and now spends more than 80% of his time managing the investment pool for which he charges non-family members a management fee. Younis has never told his employer about any of these activities. To comply with the CFA Institute Standards of Professional Conduct with regards to his business activities over the past two years, Younis would least likely be required to disclose which of the following to his employer?
- ABoard activities
- BFamily investment pool management
- CNon-family member management fees
34Kim Klausner, CFA, monitors several hundred employees as head of compliance for a large investment advisory firm. Klausner has always ensured that his company’s compliance program met or exceeded those of its competitors. Klausner, who is going on a long vacation, has delegated his supervisory responsibilities to Sue Chang. Klausner informs Chang that her responsibilities include detecting and preventing violations of any capital market rules and regulations, and the CFA Institute Code and Standards. Klausner least likely violated the CFA Institute Standards of Professional Conduct by failing to instruct Chang to also consider:
- Afirm policies
- Blegal restrictions
- Cindustry standards
35Sheila Schleif, CFA, is an equity analyst at an investment banking division of Mokara Financial Group, a full service financial group. Schleif uses a multi-factor computer model to make stock recommendations for all clients of Mokara. Schleif discovers that the model contains an error. If the error were corrected, her most recent buy recommendation communicated to all clients would change to a sell. Schleif corrects the error, changing the buy to a sell recommendation, and then simultaneously distributes via e-mail the revision to all investment banking clients who received the initial recommendation. A week later, Schleif sells the same shares she held in her personal portfolio. Concerning her actions, Schleif most likely violated which of the following CFA Institute Standards of Professional Conduct?
- AFair Dealing
- BPriority of Transactions
- CDiligence and Reasonable Basis
36Lisa Hajak, CFA, specialized in research on real estate companies at Cornerstone Country Bank for the past twenty years. Hajak recently started her own investment research firm, Hajak Investment Advisory. One of her former clients at Cornerstone asks Hajak to update a research report she wrote on a real estate company when she was at Cornerstone. Hajak updates the report, which she had copied to her personal computer without the bank’s knowledge, and replaces references to the bank with her new firm, Hajak Investment Advisory. Hajak also incorporates the conclusions of a real estate study conducted by the Realtors Association that appeared in the Wall Street Journal. She references the Journal as her source in her report. She provides the revised report free of charge along with a cover letter for the bank’s client to become a client of her firm. Concerning the reissued research report, Hajak least likely violated the CFA Institute Standards of Professional Conduct because she:
- Asolicited the bank’s client.
- Bdid not obtain consent to use the bank report.
- Cdid not cite the actual source of the real estate study.
37Tamlorn Mager, CFA, is an analyst at Pyallup Portfolio Management. CFA Institute recently notified Mager that his CFA Institute membership was suspended for a year because he violated the CFA Code. A hearing panel also came to the same conclusion. Mager subsequently notified CFA Institute that he does not accept the sanction or the hearing panel’s conclusion. Which of the following actions by Mager is most consistent with the CFA Institute Standards of Professional Conduct Program?
- APresenting himself to the public as a CFA charterholder.
- BProviding evidence for his position to an outside arbitration panel.
- CUsing his CFA designation upon expiration of the suspension period.
38Solomon Sulzberg, CFA, is a research analyst at Blue Water Management. Sulzberg’s recommendations typically go through a number of internal reviews before they are published. In developing his recommendations, Sulzberg uses a model developed by a quantitative analyst within the firm. Sulzberg made some minor changes to the model but retained the primary framework. In his reports, Sulzberg attributes the model to both the quantitative analyst and himself. Before the internal reviews of his reports were completed, Sulzberg buys shares in one of the companies. After the internal review is complete he fails to recommend the purchase of the stock to his clients and erases all of his research related to this company. Sulzberg least likely violated the CFA Institute Code of Ethics and Standards of Professional Conduct related to:
- ARecord Retention.
- BMisrepresentation
- CPriority of Transactions.
39Chris Rodriguez, CFA, is a portfolio manager at Nisqually Asset Management, which specializes in trading highly illiquid shares. Rodriguez has been using Hon Securities Brokers almost exclusively when making transactions for Nisqually clients, as well as for his own relatively small account. Hon always executes Rodriguez’s personal trades at a more preferential price than for Rodriguez’s client’s accounts. This occurs regardless of whether or not Rodriguez personally trades before or after clients. Rodriguez should least likely do which of the following in order to comply with the CFA Institute Code of Ethics and Standards of Professional Conduct?
- AEliminate the exclusive trading arrangement.
- BTrade client accounts before his own account.
- CAverage trade prices across all trading accounts.
40Which of the following statements is most likely consistent with the CFA Institute Code of Ethics? CFA Institute members and CFA candidates must:
- Apromote the integrity of and uphold the rules governing capital markets.
- Bpractice the highest level of personal and professional integrity and always act in the best interest of their employers.
- Cmaintain their professional competence and require investment professionals under their supervision to adopt the CFA Code of Ethics.
41Teresa Avila, CFA, is a micro cap investment analyst at a hedge fund. The fund requires Avila to hold any securities she recommends for the fund in her own account as well. Because Avila has such a small account, whenever she trades for her own portfolio she combines the transactions with those of the hedge fund so she is sure to have her account aligned with the fund. Has Avila most likely violated any CFA Institute Standards of Professional Conduct?
- ANo
- BYes, related to Misconduct.
- CYes, related to Priority of Transactions.
42Which of the following least likely forms the basic structure for enforcement of the CFA Institute Professional Conduct Program?
- ABylaws
- BRules of Procedure
- CBoard of Governors
43Alexandra Zagoreos, CFA, is the head of a government pension plan. Whenever Zagoreos hires a money management firm to work with the pension plan, she finalizes the deal over dinner at a nice restaurant. At these meals, Zagoreos also arranges for the money manager to provide her payments equal to 10% of the management fee the manager receives from the pension plan with no formal documentation of this agreement. Zagoreos keeps half of the payments for her own use and distributes the remainder as cash incentives to a handful of her most trusted staff. Zagoreos least likely violated which of the following CFA Institute Code of Ethics and Standards of Professional Conduct?
- AReferral fees.
- BLoyalty, Prudence and Care.
- CAdditional Compensation Arrangements.
44Wang Dazong, CFA, is a sole proprietor investment advisor. Dazong believes in putting his money at risk along with his clients and trades the same securities as his clients. In order to ensure fair treatment of all accounts, he rotates trade allocations so that each account has an equal likelihood of receiving a fill on their orders. This allocation procedure also applies to Dazong's own account. According to the CFA Institute Code of Ethics and Standards of Professional Conduct, the allocation procedure used by Dazong:
- Acomplies with the Standards.
- Brequires revision to ensure client trades take precedence.
- Cshould be disclosed and written approval received from clients.
45Q. Tammi Holmberg is enrolled to take the Level I CFA examination. While taking the CFA examination, the candidate on Holmberg’s immediate right takes a stretch break and a piece of paper from his pocket falls onto Holmberg's desk. Holmberg glances at the paper and realizes there is information written on the paper, which includes a formula Holmberg needs for the question she is working on. Holmberg had not memorized this formula and could not complete the question without this information. Holmberg pushes the paper off her desk and uses the formula to complete the question. According to the CFA Institute Code of Ethics and Standards of Professional Conduct, Holmberg most likely:
- Acompromised her exam.
- Bwas free to act on the information that fell on her desk.
- Cis responsible for notifying exam proctors of her neighbor’s violation.
46Yip Wai Yin, a CFA candidate, is an independent mutual fund sales agent. For every front-end load product she promotes, Yip receives a portion of the front-end fee as commission at the time of sale. For every back-end load fund she sells, Yip receives a smaller commission paid at the end of the year. Yip always informs her clients that she is paid a commission as an agent, but does not provide details of the compensation structure. When pitching her favored front-end load product line she tells clients 20% of her commission is always invested in the same fund as proof of her confidence in the fund she recommends. Which CFA Code and Standards with regard to Conflicts of Interest does Yip least likely violate?
- AReferral Fees.
- BDisclosure of Conflicts.
- CPriority of Transactions.
47Q. Sato Kashingaki, CFA, is a financial advisor who practices in multiple jurisdictions. In his resident country, Country A, he is not required by law to hold a financial advisor’s license but he is required to uphold a fiduciary duty to his clients. In Country B, authorities require him to hold a financial advisor’s license, but he is not expected to uphold a fiduciary duty to his clients. In Country C, authorities require both a financial advisor’s license and an asset management license in addition to upholding a fiduciary responsibility toward clients. In which of the three countries does Kashingaki have the duty to adhere to the CFA Code and Standards over local laws?
- ACountry A.
- BCountry B.
- CCountry C.
48Q. Lewis McChord, CFA, a research analyst at an investment bank, covers the auto industry. McChord recently read a report on an auto manufacturing company written by Pierce Brown. Brown’s report provided extensive coverage of the company’s newly launched products indicating that sales volume, not yet publicly available, would raise future profits. Intrigued by the report, McChord called a senior executive at the company whom she has known personally for years. The officer gave her specific details on new vehicle sales, indicating that profits would double in the current quarter. McChord added this data to Brown’s report and then circulated it within her firm as her own report. McChord least likely violated which of the following CFA Institute Standards of Professional Conduct?
- AMisrepresentation
- BPreservation of Confidentiality
- CMaterial Nonpublic Information
49Q. Abe Seneca, CFA, supervises a team of analysts who create index funds for institutional investors. When Seneca makes sales demonstrations without his colleagues to potential clients simulating the fund’s performance, the scenarios he prepares show outcomes based on assumptions reflecting upside bias and positive risk assessments. Gail Tremblay, CFA, an analyst in Seneca’s group, observes that the actual performance of these index funds is less than indicated in the scenario outcomes shown in the sales meetings. Seneca least likely violated which of the following CFA Institute Standards of Professional Conduct?
- ALoyalty
- BPerformance Presentation
- CResponsibilities of Supervisors
50Priscilla Moab, CFA, is the director of marketing at Red Lantern Investments. Red’s investment approach uses technical and fundamental analysis as well as portfolio construction to minimize risk. Moab plans to market an online investment newsletter to retail clients. Moab decides to let prospective clients have access to Red’s buy and sell recommendation list by posting this information on a social media site. The posting also provides information on Red’s basic investment process and logic. To avoid violating the CFA Institute Code of Ethics and Standards of Professional Conduct, Moab should most likely:
- Adescribe the investment approach in detail.
- Bupdate investment process changes annually.
- Cindicate that additional information and analysis are available.
51Upon receiving notification that he passed his Level III CFA exam, Paulo Garcia updates his educational background on his social media site by adding “completed the CFA course.” Does Garcia most likely violate the CFA Institute Standards of Professional Conduct?
- ANo
- BYes, because it could imply he has obtained the charter.
- CYes, because he doesn’t describe the certification process.
52Alexandra Smirnov, CFA, is a pension consultant to the Springwell Pension Fund. After reviewing Springwell’s three-year performance presentation showing the fund’s underperformance relative to its investment objectives and agreed benchmarks, Smirnov recommends that the fund hire new asset managers. Smirnov proposes that the fund hire Newday Managers on the basis of recent meetings she has had with the firm. Lengthy discussions at these meetings included Newday’s investment strategy, its suitability to manage pension funds, its ability to adhere to its stated strategy, the firm’s historical investment performance, and its adoption of the CFA Institute Code and Standards. Smirnov turned down Newday’s offer of an introduction fee when recommending its services, but did not inform Springwell trustees of this offer. Which of the following CFA Institute Standards does Smirnov most likely violate?
- AReferral Fees
- BLoyalty, Prudence, and Care
- CDiligence and Reasonable Basis
53Gregor Pavlov, CFA, is a fund manager working for the general partner of a new private equity fund. Pavlov includes in the fund marketing material his performance history from his previous employer. He received permission from his former employer to take his historical return figures and the supporting research reports he used to make the related investment decisions. Did Pavlov most likely violate the CFA Institute Standards?
- ANo
- BYes, with regard to Loyalty
- CYes, with regard to Record Retention
54In the CFA Institute Standards of Professional Conduct, Standard III–Duties to Clients most likely includes which of the following subsections?
- AA. Performance Presentation
- BB. Knowledge of the Law
- CC. Independence and Objectivity
55Q. “Additional Compensation Agreements” is most likely a sub-section of which CFA Institute Standard of Professional Conduct?
- AA. Duties to Employers
- BB. Duties to Clients
- CC. Professionalism
56Q. Which CFA Institute Standard of Professional Conduct most likely includes a sub-section entitled “Communication with Clients and Prospective Clients”?
- AA. Investment Analysis, Recommendations, and Actions
- BB. Conflicts of Interest
- CC. Duties to Clients
57Q. “Additional Compensation Agreements” is most likely a sub-section of which CFA Institute Standard of Professional Conduct?
- AA. Duties to Employers
- BB. Duties to Clients
- CC. Professionalism
58Q. Which of the following situations most likely helps to explain why the GIPS standards were created?
- AA. Firms only including top performing funds to represent their performance history.
- BB. Asset managers including the performance of all portfolios including those no longer managed in their performance history.
- CC. Consistency amongst fund managers when making investment performance presentations.
59Q. Ensuring that a country’s interests are taken into account when effectively implementing the GIPS standards on a country-wide basis most likely relies on which of the following entities?
- AA. A local sponsoring organization
- BB. The local regulator(s)
- CC. Local independent valuation firms
60Q. When claiming GIPS compliance, a firm will least likely have to apply all of the required provisions in the first five major sections of the GIPS standards when investing in:
- AA. separately managed accounts.
- BB. equity mutual funds or unit trusts.
- CC. commodity related portfolios.
61Q. Marc Davidson, CFA, works as a trust specialist for Integrity Financial. On his own time, Davidson starts a part time consulting business providing advice to Trustees for a fee. He conducts this business on his own time. Davidson asks his assistant to compile a list of Integrity’s clients and their contact information. The following month, Davidson is offered a similar role at Integrity’s largest competitor, Legacy Trust Services, Inc. After he begins working at Legacy, his new manager arranges for him to meet with a number of prospective clients, many of whom are clients of Integrity. After meeting with Davidson, a number of former Integrity clients decide to transfer their business to Legacy. Did Davidson’s action violate the Code and Standards?
- AA. No
- BB. Yes, Davidson’s part time consulting business is a violation of the Standards.
- CC. Yes, both Davidson’s part time consulting business and his meetings with Integrity clients are a violation of the Standards.
62Q. Lee Chu, a CFA candidate, develops a new quantitative security selection model exclusively through back-testing on the Chinese equity market. Chu is asked to review marketing materials including an overview of the conceptual framework for his model, providing back-tested performance results, and listing the top holdings. Chu directs the marketing group to remove the description of his model due to concerns competitors may attempt to replicate his investment philosophy. He also instructs the marketing group to remove the list of the top holdings because it shows that the top holding represents 30 percent of the back-tested model. Which of the following actions is least likely to result in a violation of the Code and Standards? Chu’s:
- AA. use of back-tested results in communication with prospective clients.
- BB. failure to adequately describe the investment process to prospective clients.
- CC. failure to disclose that the top holding represents such a large allocation in the model.
63Q. The Global Investment Performance Standards (GIPS) least likely require:
- AA. non-discretionary portfolios to be included in composites.
- BB. non–fee-paying portfolios to be excluded in the returns of appropriate composites.
- CC. composites to be defined according to similar investment objectives and/or strategies.
64Q. For a retail client's portfolio to be included in a GIPS compliant firm’s composite, it will most likely be in a composite:
- AA. composed of discretionary funds.
- BB. restricted to retail funds.
- CC. with both fee-paying and non–fee-paying funds.
65Q. Oni Erobo, CFA, the General Partner in a real estate development project, is responsible for completing the project within an 18-month period and within budget. Erobo will receive an equity stake of 20% in the project if it comes within budget. Concerned that project costs could escalate, the Limited Partners require Erobo to cap expenses at 15% above budget. Costs were within expectation up until the last month of construction when imported lighting fixture costs (accounting for roughly 5% of total costs) escalated by more than 50%. As a result, the overall return declined below the partners expected 35% ROI. Erobo did not inform the Limited Partners about the increased costs. Did Erobo most likely violate the CFA Code of Ethics and Standards of Professional Conduct?
- AA. No.
- BB. Yes, because returns are lower than expected by the Partners.
- CC. Yes, because he did not disclose the increased costs to his Partners.
66Q. Francesca Ndenda, CFA, and Grace Rutabingwa work in the same department for New Age Managers with Rutabingwa reporting to Ndenda. Ndenda learns that Rutabingwa received a Notice of Enquiry from the Professional Conduct Program at CFA Institute regarding a potential cheating violation when he sat for the CFA exam in June. As Rutabingwa’s supervisor, Ndenda is afraid the behavior of Rutabingwa will be seen as a violation of the CFA Code and Standards. Does Ndenda most likely have cause for concern?
- AA. Yes
- BB. No, because her responsibilities do not apply.
- CC. No, not until Rutabingwa is found guilty of cheating.
67Q. Ileana Inkster, CFA, was recently offered a senior management position within the trust department at a regional bank. The department is new, but the bank has plans to expand it significantly over the next few months. Inkster has been told she will be expected to help grow the client base of the trust department. She is informed that the trust department plans to conduct educational seminars and pursue the attendees as new clients. Inkster notices that recent seminar advertisements prepared by the bank’s marketing department do not mention that investment products will be for sale at the seminar. The ads indicate attendees can “learn how to immediately add $100,000 to their net worth.” What should Inkster most likely do to avoid violating any CFA Institute Standards of Professional Conduct?
- AA. Decline to accept the new position
- BB. Accept the position and revise the marketing material
- CC. Accept the position and inform senior management of inadequate compliance procedures
68Q. Charlie Mancini, CFA, is the Managing Director for Business Development at SV Financial (SVF), a large US-based mutual fund organization. Mancini has been under pressure recently to increase revenues. In order to secure business from a large hedge fund manager based in Asia, Mancini recently approved flexible terms for the fund’s client agreement. To allow for time zone differences, the agreement permits the hedge fund to trade in all of SVF’s mutual funds six hours after the close of US markets, which is prohibited by US regulators. Did Mancini violate any CFA Institute Standards of Professional Conduct?
- AA. No
- BB. Yes, with regard to Fair Dealing.
- CC. Yes, with regard to Fair Dealing and Material Nonpublic Information.
69Q. While at a bar in the financial district after work, Ellen Miffitt, CFA, overhears several employees of a competitor discuss how they will manipulate down the price of a thinly traded micro cap stock’s price over the next few days. Miffitt’s clients have large positions of this stock so when she arrives at work the next day she immediately sells all of these holdings. Because she had determined the micro cap stock was suitable for all of her accounts at its previously higher price, Miffitt buys back her client's original exposure at the end of the week at the new, lower price. Which CFA Institute Standards of Professional Conduct did Miffitt least likely violate?
- AA. Market Manipulation
- BB. Preservation of Confidentiality
- CC. Material Nonpublic Information
70Q. Sergio Morales, CFA, believes he has found evidence that his supervisor is engaged in fraudulent activity involving a client’s account. When Morales confronts his supervisor, he is told the client is fully aware of the issue. Later that day, Morales contacts the client and upon disclosing the fraudulent activity, is told by the client to mind his own business. Following the requirements of local law, Morales provides all of his evidence, along with copies of the client’s most recent account statements, to a government whistle blower program. Has Morales most likely violated the CFA Institute Standards of Professional Conduct?
- AA. No.
- BB. Yes, concerning Duties to Employers.
- CC. Yes, concerning Preservation of Confidentiality.
71Q. Eileen Fisher, CFA, has been a supervisory analyst at SL Advisors for the past ten years. Recently, one of her analysts was found to be in violation of the CFA Institute Standards of Professional Conduct. Fisher has placed limits on the analyst’s activities and is now monitoring all of his investment activities. Although SL did not have any compliance procedures up to this point, to avoid future violations, Fischer has put in place procedures exceeding industry standards. Did Fisher most likely violate any CFA Institute Standards of Professional Conduct?
- AA. Yes
- BB. No, because she has taken steps to ensure the violations will not be repeated by the analyst.
- CC. No, because she is taking steps to implement compliance procedures that are more than adequate.
72Q. Bryan Barrett, CFA, runs an investment advisory service providing advice on gold and other commodities to several large retail banks. Barrett advertises his services in widely read publications to broaden his business to include retail clients. Because the client base for the institutions that Barrett serves is large, he is comfortable stating in the ads that thousands of his clients have benefited from his advice. Does Barrett's advertisement most likely violate any CFA Institute Standards of Professional Conduct?
- AA. No.
- BB. Yes, related to Misrepresentation.
- CC. Yes, related to Communication with Clients.
73Q. When Jefferson Piedmont, CFA, joined Branch Investing, Branch began using a quantitative stock selection model Piedmont had developed on his own personal time prior to his employment with Branch. One year later when Piedmont left the firm, he found the original copy of the model he had developed in a file at his home and presented it to his new employer, who immediately began using the model. According to the Standards of Practice Handbook, did Piedmont most likely violate any CFA Institute Standards of Professional Conduct?
- AA. No
- BB. Yes, because he misappropriated property now belonging to Branch.
- CC. Yes, because he failed to inform his new employer the model was the same one used by his previous employer.
74Q. Nicholas Bennett, CFA, is a trader at a stock exchange. Another trader approached Bennett on the floor of the exchange and verbally harassed him about a poorly executed trade. In response, Bennett pushed the trader and knocked him to the ground. After investigating the incident, the exchange cleared Bennett from any wrongdoing. Which of the following best describes Bennett’s conduct in relation to the CFA Institute Code of Ethics or Standards of Professional Conduct? Bennett:
- AA. did not violate any Code or Standard.
- BB. violated the Professional Misconduct Standard.
- CC. violated both Misconduct and Integrity of Capital Markets Standards.
75Q. Albert Nyakenda, CFA, was driving to a client’s office where he was expected to close a multi-million-dollar deal when he was pulled over by a traffic policeman although he did not believe he had violated any traffic laws. When Nyakenda realized the policeman planned to wrongly ticket him for speeding, he offered to buy him “lunch” so that he could quickly get to his client’s office. The lunch would cost significantly more than the ticket. The alternative was to go to the police station and file a complaint of being wrongly accused that would also involve going to court the next day to present his case. Did Nyakenda most likely violate the CFA Code of Ethics?
- AA. Yes
- BB. No, because he was wrongly accused.
- CC. No, because the cost of lunch is more than the ticket.
76Q. Beth Kozniak, a CFA candidate, is an independent licensed real estate broker and a well-known property investor. She is currently brokering the sale of a commercial property on behalf of a client in financial distress. If the client’s building is not sold within 30 days, he will lose the building to the bank. A year earlier, another client of Kozniak’s had expressed interest in purchasing this same property. However, she is unable to contact this client, and she has not discovered any other potential buyers. Given her distressed client’s limited time frame, Kozniak purchases the property herself and foregoes any sales commission. Six months later, she sells the property for a nice profit to the client who had earlier expressed interest in the property. Does Kozniak most likely violate the CFA Institute Standards of Professional Conduct?
- AA. No
- BB. Yes, she did not disclose her potential conflicts of interest to either client.
- CC. Yes, she profited on the real estate to the detriment of her financially stressed client.
77Q. Colin Caldwell, CFA, is the chief investment officer of Northwest Mutual Fund, whose investment objective is to invest in fixed income emerging market securities. Caldwell allocates the fund’s assets primarily to bonds of commodity producers in emerging markets and invests in a combination of several different investments to ensure an acceptable level of risk. The allocation is clearly disclosed in all fund communications. High volatility in the commodities markets at the start of the year makes Caldwell pessimistic about returns, so he shifts the fund into emerging market and US government securities, positions he maintains at the end of the year. This change is noted in the next annual report to fund shareholders. Caldwell’s investment change least likely violated the CFA Institute Code of Ethics and Standards of Professional Conduct concerning:
Q. Colin Caldwell, CFA, is the chief investment officer of Northwest Mutual Fund, whose investment objective is to invest in fixed income emerging market securities. Caldwell allocates the fund’s assets primarily to bonds of commodity producers in emerging markets and invests in a combination of several different investments to ensure an acceptable level of risk. The allocation is clearly disclosed in all fund communications. High volatility in the commodities markets at the start of the year makes Caldwell pessimistic about returns, so he shifts the fund into emerging market and US government securities, positions he maintains at the end of the year. This change is noted in the next annual report to fund shareholders. Caldwell’s investment change least likely violated the CFA Institute Code of Ethics and Standards of Professional Conduct concerning:- AA. diversification
- BB. communication with clients.
- CC. investments outside his mandate.
78Q. Benefits of compliance with the CFA Institute Global Investment Performance Standards (GIPS) least likely include:
- AA. strengthening of internal controls.
- BB. participation in competitive bidding.
- CC. elimination of in-depth due diligence for investors.
79Q. Margie Germainne, CFA, is a risk management consultant who has been asked by a small investment bank to recommend policies to prevent bank employees from front-running client orders. These clients generally invest in one or more of the bank’s large cap equity unit trusts. To ensure compliance with the CFA Institute Standards of Professional Conduct, Germainne should least likely recommend which of the following? Employees should be restricted from trading:
- AA. equity related securities.
- BB. without prior permission.
- CC. during established time periods.
80Q. Firms claiming GIPS compliance must make every reasonable effort to provide a compliant presentation to which of the following?
- AA. Existing clients
- BB. Prospective clients
- CC. Both existing and prospective clients
81Q. Fundamental Asset Managers claims compliance with the CFA Institute Global Investment Performance Standards (GIPS) and manages both discretionary and non-discretionary accounts. When constructing a single composite for Fundamental, Juma Dzuya includes all discretionary, fee-paying accounts with both value and growth strategies. Does the composite constructed by Dzuya most likely meet GIPS criteria?
- AA. Yes
- BB. No, because of non-similar investment strategies.
- CC. No, because non-discretionary accounts are not included.
82Q. Kam Bergeron, CFA, is an equity portfolio manager who often takes time off in the afternoon to play golf with important clients. Today, Bergeron is on the golf course when his game is interrupted by a phone call from his office. The call is from Bergeron’s assistant, who notifies him of a steep and accelerating market decline. Bergeron, eager to get back to his golf game, tells his assistant to raise cash by selling 15% of all clients’ holdings. Bergeron instructs his assistant to first sell the most liquid stocks in each client’s portfolio and then do the same for his personal account. Bergeron is least likely to be in violation of which of the CFA Institute Standards of Professional Conduct?
- AA. Suitability
- BB. Priority of transactions
- CC. Diligence and reasonable basis
83Q. For firms to claim compliance with the GIPS standards they most likely must:
- AA. take responsibility for their claim of compliance and maintaining that compliance.
- BB. hire an independent third party to test a sample of their composites.
- CC. increase the consistency and quality of the firm’s compliant presentations.
84Q. A research analyst is facing a moral dilemma and decides to use an ethical decision-making framework. After looking at the facts at hand and identifying the situational influences, he still cannot make a decision on the best course of action. His least appropriate next step is to:
- AA. determine what additional information is needed.
- BB. decide, act, monitor, and reflect.
- CC. ask someone else to give guidance.
85Q. From the point of view of an investor, unethical behavior by investment professionals can most likely lead to which of the following?
- AA. Increased willingness to accept risk
- BB. Rise in the demand for investments
- CC. Demand for a higher return
86Q. A regulator who requires financial advisers to merely consider the suitability of a product when making recommendations to their clients would most likely be setting:
- AA. both a legal and an ethical standard.
- BB. an ethical standard.
- CC. a legal standard.
87Q. Under what circumstances could a client possibly win a lawsuit against a financial adviser despite the financial adviser abiding by all regulatory and legal requirements?
- AA. The adviser benefiting more from the relationship than the client
- BB. The adviser not being subject to a code of ethics
- CC. The adviser violating his employer’s published code of ethics
88Q. Examples of the beneficial features of using an ethical decision-making framework least likely includes analyzing:
- AA. the best course of action when alternatives are available.
- BB. the decision maker’s perspective of contemplated actions.
- CC. a broader picture from a long-term point of view.
89Q. The most important factor in promoting ethical decision making among an investment firm’s employees is:
- AA. a strong culture of integrity by the firm’s senior management.
- BB. adoption of a code of ethics that clearly defines the firm’s ethical principles.
- CC. the investment professional’s natural desire to do the right thing.
90Q. What is most likely a critical aspect of the Consider phase of an ethical decision-making framework?
- AA. Distinguishing duties to stakeholders
- BB. Contemplating your decision
- CC. Seeking additional guidance
91Q. A profession is most likely described as a group of people that:
- AA. has a common level of basic knowledge about a particular subject.
- BB. monitors its members based on an agreed-on code of ethics.
- CC. puts the interests of its members first.
92Q. An investment fund manager has a finance degree and over 20 years of experience working for a top-ranking asset management firm. Based only on this information, could the investment fund manager most likely claim to be part of a profession?
- AA. Yes, a person working in this industry requires specialized knowledge and skills.
- BB. No.
- CC. Yes, as part of the industry, he is providing a service to others.
93Q. The relationship between an investment professional and her clients is predominately based on trust, most likely because the investment professional:
- AA. sells or gives advice related to tangible products and services.
- BB. has specialized knowledge, leading her to have more power.
- CC. has access to information on which to base investment decisions.
Informationen
- Beschreibung
- Level 1 CFA (First Attempt) Quiz am Ethics, erstellt von Sukey Huang am 05/06/2018.
- Autor
- Sukey Huang
- Sprache
- English
- Aufrufe
- 1
- Schlagwörter
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