16 CFA Sample Questions Free for Level 2 with Answers on Ethics

Feel free to test 16 CFA Sample Questions Free for Level 2 with Answers on Ethics here if you are interested in the Ethics topic. As listed in the CFA topic weight, although Ethical and Professional Standards only accounts for 10-15% of the weight in the exam, this topic is particularly decisive that you pass or fail in the CFA exam. It’s true for all three levels. Here’s why. If your score in total is right for the minimum passing score, it means that you need more than 70% score in the ethics section to pass. As a result, you must know clearly the Standards and Code of Ethics and apply them into the exam. This free online CFA mock exam for level 2 is the ideal choice for all test-takers, even for fresh candidates. Try it out and taste the actual feeling before the exam.

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Document trans with borkers involving SD arrangements, icnluding: list of proprietary and third party research providers, and description of the service and products received from providers

• ROS:
• required record
• not required
• required

- must include whether traded on principal basis or not

• client disclosure of soft dollar policy must include
• material info? violate/not violate
• soft dollar notes
• Voting all proxies of stocks the client owns?

- overheard ibankers in elevators -> violate- overheard CEOs discussing in restaurant -> not violate- overheard CEOs discussing in elevators -> violate

• material info? violate/not violate
• required record
• What is directed brokerage? does it violate?
• soft dollar notes

When analyzing investments, making recommendations, and taking investment actions use diligence, independence, and thoroughness.Investment analysis, recommendations, and actions should have a reasonable and adequate basis, supported by research and investigation.The application of this Standard depends on the investment philosophy adhered to, Members' and Candidates' roles in the investment decision-making process, and the resources and support provided by employers. These factors dictate the degree of dili

• soft dollar notes
• III.A - Loyalty, prudence, and care
• V.A - Diligence and reasonable basis
• required record

- make sure: research directly benefits clients. sometimes: pay attention to type of clients and types of research to see if they are consistent

• ROS:
• required record
• not required
• soft dollar notes

directed brokerage: disclose in writing, or disclose to client ouir duty to seek best execution,only recommended to seek written acknowledgement from client or assurance from fiduciary that directed brokerage benefits client

• required
• required record
• ROS:
• not required

violate iII(D) -client - presentation

• III.A - Loyalty, prudence, and care
• V.A - Diligence and reasonable basis
• implying that client can expect a rate of return based on past returns
• Voting all proxies of stocks the client owns?

Proxies have economic value to the client. To comply with Standard III(A), the analyst is obligated to vote proxies in an informed and responsible manner. A cost benefit analysis may show that voting all proxies may not benefit the client, so voting proxies may not be necessary in all instances. .

• V.A - Diligence and reasonable basis
• Voting all proxies of stocks the client owns?
• additional provided to client upon request
• material info? violate/not violate

Directed brokerage occurs when the client requests that a portion of the client's brokerage be used to purchase services that directly benefit the client. Although, this may prevent best execution, it does not violate the Standards as it was directed by the client, not the brokerage firm

• material info? violate/not violate
• III.A - Loyalty, prudence, and care
• What is directed brokerage? does it violate?
• V.A - Diligence and reasonable basis

- report is updated at least annually- prohibits sharing entire report w recommendation w client- interraction w ibanking must go thru the compliance dept.- doesn't need to disclose if involved in an IPO. only have to disclose if manage or co-manage- can't trade in contrary to the employee or firm's most recent published recs.

• required
• not required
• ROS:
• required record

...

• participation in IPOs and private placements -> strict limit due to VI(B)
• material info? violate/not violate
• additional provided to client upon request
• What is directed brokerage? does it violate?

- recommended to provide: client's specific product/services, total brokerage paid from all accts under manager's discretion- not required to report client's directed if less than 10 percent

• implying that client can expect a rate of return based on past returns
• additional provided to client upon request
• Voting all proxies of stocks the client owns?
• additional info provided upon request may include: firmwide description of services/products obtained by broker, brokers, and total commissions generated from client's account (also include brokerage related to client directed), aggregrate percentage of the brokerage derived from client directed and percengage of client's directed

- written instructions from client that restate manager's continuing responsibilities to seek best execution

• required record
• ROS:
• not required
• required

...

• client disclosure of soft dollar policy must include
• What is directed brokerage? does it violate?
• SDS: must disclose prominently: types of reserach received, extent of its use, and whether an affiliated is involved (not required to be in writing)- required to be in writing: claim compliance with SDS, and must be provided at least annuallyprominently says that additional info is available upon request
• Voting all proxies of stocks the client owns?

- firm wide:description of all services

• Voting all proxies of stocks the client owns?
• soft dollar notes
• material info? violate/not violate
• additional provided to client upon request