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I. Professionalisma. Knowledge of the Lawb. Independence and Objectivityc. Misrepresentationd. Misconduct
To use the designation, must have the work experience, exam scores AND be a current CFA Institute Member.
4)Practice and encourage others to practice in a professional and
ethical manner that will reflect credit on themselves and the
profession5)Promote the integrity of and uphold the rules governing
capital markets.6) Maintain and improve their professional competence
and strive to maintain and improve the competence of other investment
professionals.
1) Adjectives, not nouns2) Always capitalized3) No alteration for new
words and phrases4) Never as part of a firm name5) Never given more
prominence than the charterholder's name6) No citing expected date7) No
designation for passing exams.8) No periods.9) Cite in resume using "CFA
Institute as conferring body and the date the designation was
received."
Standard VI(C) is meant to address instances where the invest- ment
advice provided by a member or candidate appears to be objective and
independent but in fact is influenced by an unseen referral arrange-
ment. It is not meant to cover compensation by employers to employees
for generating new business when it would be obvious to potential
clients that the employees are "referring" potential clients to the
services of their employers.
Loyalty: In matters related to their employment, Members and
Candidates must act for the benefit of their employer and not deprive
their employer of the advantage of their skills and abilities, divulge
confidential information or otherwise cause harm to their employer.
II. Integrity of Capital Marketsa. Material Nonpublic Informationb. Market Manipulation
1. Self-disclosure of complaint or legal proceeding2. Written
complaint by third party3. Media or other public source4. Exam proctor
report
Information is "material" if its disclosure would probably have an
impact on the price of a security or if reasonable investors would want
to know the information before making an investment decision.
Professional Conduct Program
A group of charterholders tasked with maintaining and and interpreting
the code and standards and making sure they are effective.
Additional compensation arrangements: Members and candidates must not
accept gifts, benefits, compensation or consideration that competes with
or might reasonably be expected to create a conflict of interest with
their employers interest unless they obtain written consent from all
parties involved.
1) Attempt to stop behavior by bringing it to the employer's attention2) Dissociate from activity
Conduct. Members must not engage in any conduct that compromises the
reputation or integrity of the CFA institute or the CFA designation or
the CFA Exams.
1) False or misleading information2) Transactions that deceive by distorting the price-setting mechanism
Communication with Clients and Prospective Clients. Members and
candidates must:1) Disclose to clients the basic format and general
principles of the investment process and disclose promptly any
changes.2) Use reasonable judgment to identify which factors are
important to investment analyses and include those factors in
communications with clients.3) Distinguish between fact and opinion in
the presentation of investment analysis and recommendations
I: ProfessionalismII: Integrity of Capital MarketsIII: Duties to
ClientsIV: Duties to EmployersV: Investment Analysis, Recommendations,
and ActionsVI: Conflicts of InterestVII: Responsibilities as a CFA
Institute Member or CFA Candidate
2) Independence and Objectivity: Members must use reasonable care and
judgment to achieve and maintain independence and objectivity. Members
and candidates must not offer, solicit, or accept any gift, benefit,
compensation or consideration that reasonably could be expected to
compromise their own or another's independence.
Performance Presentation. Members and candidates must make reasonable
efforts to ensure that performance information is fair, accurate and
complete.
Investment Policy Statement
III. Duties to Clientsa. Loyalty, Prudence, and Careb. Fair Dealingc. Suitabilityd. Performance Presentation
Preservation of Confidentiality. Members and candidates must keep
information about clients confidential unless:1) It concerns illegal
activities2) Disclosure is legally required3) The client allows
disclosure
1) Knowledge of the Law: Members and candidates must understand and
comply with all applicable laws, rules and regulations (including the
COE and SPC) of any body governing their professional activities. In the
event of conflict, members must comply with the more strict rule.
Members may not knowingly participate in and must dissociate from any
violation of such laws, rules or regulations.
4) Misconduct: Members and Candidates must not engage in any
professional conduct involving dishonesty, fraud, or deceit or commit
any act that reflects adversely on their professional reputation,
integrity or competence.
In the absence of local guidelines or other regulations, CFA institute
recommends maintaining records for at least seven years.
A member's or candidate's duty of fairness and loyalty to clients can
NEVER be overridden by client consent to patently unfair allocation
procedures.
1) Specific details of questions on the exam2) Broad topical areas and formulas tested or not tested on the exam
Two principles:1. Fair process to the member or candidate2. Confidentiality of proceedings
IV. Duties to Employersa. Loyaltyb. Additional Compensation Arrangementsc. Responsibility of Supervisors
o Act with integrity, competence, diligence, respect, and in an
ethical manner with the public, clients, prospective clients, employers,
employees, colleagues in the investment profession, and other
participants in the global capital markets.o Place the integrity of the
investment profession and the interest of clients above their own
personal interests.o Use reasonable care and exercise independent
professional judgment when conducting investment analysis, making
investment recommendations, taking investme
A company may use an agreement to increase liquidity on a new
instrument or exchange, so long as it is disclosed. Otherwise it
violates IIB as an attempt to mislead investors.
Market Manipulation. Members and candidates must not engage in
practices that distort prices or artificially inflate trading volume
with the intent to mislead market participants.
Priority of Transactions. Investment transactions for clients and
employers must have priority over investment transactions in which a
member or candidate is the beneficial owner.
Firms should require prior approval for employee participation in
IPOs, with prompt disclosure of investment actions taken following.
Strict limits should be imposed on investment personnel acquiring
securities in private placements.
V: Investment Analysis, Recommendations, and Actionsa. Diligence &
Reasonable Basisb. Communication with clients and prospective clientsc.
Record Retention
The term "CFA Institute Member" refers to regular or affiliate members
of CFA institute who have met the membership requirements. Once
accepted, members must satisfy the following requirements to maintain
status:1) Remit annually a completed Professional Conduct Statement
renewing the COE commitment2) Pay dues
Suitability. 1) Members and Candidates must make a reasonable inquiry
into a client's investment experience, objectives and financial
constraints prior to making any investment recommendation or taking
investment action and must reassess regularly. Further, they must
determine than an investment is suitable to the client's situation,
written objectives, mandates and constraints before making an investment
recommendation or taking investment action. 2) When managing a
portfolio to a specific strategy, mandat
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