50 Newest Free CFA Sample Exam Level 3 Questions and Answers on Ethics

Undeniably, practising questions at an early stage is highly recommended if you want to pass the CFA exam. It’s exactly true for all three levels. That’s the reason why 50 Newest Free CFA Sample Exam Level 3 Questions and Answers on Ethics are designed to make the biggest chance for candidates who want to gain the full scores in the ethics section. Through multiple choice questions which mimics those in the CFA level 2 exam, it’s unlikely for you to evaluate the current knowledge and fill the gaps before the upcoming exam. Surely, the earlier you learn the ethics section, the easier all three levels will be. Visit the easy-to-understand CFA sample exam with clear answers to test how well you are studying and learning the material. Best luck!
To view full questions and answers, please kindly visit our site:  http://cfaexampreparation.com/349/50-newest-free-cfa-sample-exam-level-3-questions-answers-ethics/

limited investment knowledge or interestunrealistic expectations of future returnsbounded rationality - investors' emotions impinge on ability to make purely rational decisionsbounded self-control - failure to follow throughbounded self-interest - econ theory "act exclusively in their own interest" in reality people pursue actions contrary to that

• MF with UST "default risk of the bonds is virtually zero"
• analyst changing recommendation upon conversation with another analyst
• DC participants not well prepared to serve as their own invstmnt mngr because
• earnings surprises and anchoring

controlling emotions... "don't dip into capital" heuristic.. a feeling of self-control due to the perception of dividends as "income" not related to capital

• status quo
• self-control problem
• illusion of control
• self-control

the recent performance grants the investor super-confidence in future performance, overpaying for the stocks, receiving a lower return as the reversion to the mean bears out...

• status quo
• self-control
• loss aversion
• growth stocks

arbitrary rules to guard vs lapses in judgment"don't dip into capital"

• illusion of control
• illusion of knowledge
• self-control
• self-control problem

watch the guarantee of ftr prfrmnc based on prvs rslts

• "great companies are good stocks"
• MF with UST "default risk of the bonds is virtually zero"
• "you will earn a 10% rate of return each year based on the historical performance of the stock market"
• "We expect Walkton's stock price to rise by at least $8.00 a share by the end of the year. Because the dividend will increase by $1.50 a share, the stock price gain will be fueled, in large part, by the increase in the dividend. Investors buying the stock at the current time should expect to realize a total return of at least 15 percent on the stock."

lower confidence in price targets than earnings projections attributed to a feeling of control

• illusion of control
• self-control
• mental accounting
• illusion of knowledge

retained for all subordinates -- both the CFA charterholders and the non-charterholders

• supervisory responsibilities when delegated by a CFA charterholders
• "great companies are good stocks"
• unrealistic expectations of future returns
• earnings surprises and anchoring

is there a reasonable basis? is there a distinguishing between facts vs opinions? most of the time there is not a reasonable basis and it may even simply be opinion

• unrealistic expectations of future returns
• when people are overconfident....
• analyst changing recommendation upon conversation with another analyst
• analysts' long-term forecasts

availability of information skewing the perceptionbear / mt lion vs bison in yellowstone

• money illustion
• heuristic...
• hedonic editing
• availability heuristic

psychological allocations leaving us prone to different calculations of riskretirement account vs "mad money" account

• self-control
• money illustion
• hedonic editing
• mental accounting

anchoring: disproportionately influenced by their initial analysis... failure to adjust appropriately

• hedonic editing
• anchoring and adjustment
• time horizon defined
• money illustion

don't break the confidentiality agreement unless investigated by CFA / FINRA, etc.is the information nonpublic? material?

• confidential client information may be sought by "potential contributors" etc. -- those apparently seeking to benefit the client...
• "great companies are good stocks"
• MF with UST "default risk of the bonds is virtually zero"
• analyst changing recommendation upon conversation with another analyst

return optimization"if i sell the stock and it takes off, i wil have missed a great investment opportunity"more than the pain of loss... the pain of feeling responsible for the lossMarkowitz comment on MPT ... related to self-control don't spend capital heuristic, dividends for expenses rather than capital

• money illustion
• regret minimization vs
• pick up on question 26
• representativeness

tied to mental accountingreframe mental accounts to better match their preferenceslosing trades: transfer of assets vs sale at a lossnet losses vs gains while inividual gains maintained as separate mental accounts

• heuristic...
• mental accounting
• convey behavior
• hedonic editing

exports...know more than most...leads to overconfidence

• illusion of control
• aversion to ambiguity
• illusion of knowledge
• self-control problem

why institutional accounts will behave similiarly even though they may have different missions, liability structures etc ... based on their assumption that the peer group correctly evaluates securities and markets

• conservatism bias
• convey behavior
• loss aversion
• money illustion

through the end of r2

• myopic loss aversion
• pick up on question 26
• money illustion
• regret minimization vs

familiarity - assumptions based on company stock, etcendorsement - erroneously assume company endorsed by including it in set of options

• anchoring and adjustment
• winner-loser effect
• illusion of knowledge
• familiarity vs endorsement

DC have unrealistically optimistic expectations of future returns from various asset classes

• unrealistic expectations of future returns
• analysts' long-term forecasts
• illusion of control
• illusion of knowledge

emotionally reacting to nominal vs real valuesmortgage rates and housing prices in the midst of boomsrelated to frame dependence - cognitive and emotional response to inflation - Ann and Barbara example, higher raise but lower real increase interpreted differently

• loss aversion
• money illustion
• convey behavior
• mental accounting

prefer known to unknown... the familiar to the unfamiliar"this won't do.... i've never heard of half the companies on this list"

• illusion of knowledge
• gamblers fallacy
• illusion of control
• aversion to ambiguity

seeking to avoid even short-term losses

• convey behavior
• money illustion
• loss aversion
• myopic loss aversion

overshoot in the direction of recent forecasts

• winner-loser effect
• analysts' long-term forecasts
• conservatism effects
• illusion of control

investors prefer some frames to othersrelated to frame dependence... "the way people behave depends on the way their decisions are framed'

• hedonic editing & frame dependence
• hedonic editing
• anchoring and adjustment
• long run... cash equivalents

underreact to changes in the information mixtoo conservative in their assessment of the impact of new information... biased in the direction of their initial estimate

• status quo
• conservatism bias
• convey behavior
• loss aversion