2019 CFA level 3 qbank r 1 2 CFA ins code of ethics and standards of prof conduct standards I–VII 1 questions

10/11/2018 Learning Management System Question #1 of 181 Sandra Bulow, CFA, is responsible for updating her employing rm's website to include changes in analysis techniques and trading procedures She is often very delinquent in making these changes, despite working extensive hours She is aware clients are using the website to make investment decisions, and has received complaints from the sales department as the information on the website if often di erent from what is presented in sales meetings Bulow is most likely: in A) in violation of Standard I(C) "Misrepresentation." Question #2 of 181 bo ok c C) not in violation of any Standard en tre B) in violation of Standard III(B) "Fair Dealing." Tony Calaveccio, CFA, is the manager of the TrustCo Small Cap Venture Fund in Toronto He places trades for the fund with River City Brokerage River City presents Calaveccio with a bottle of inexpensive wine at Christmas each year Calaveccio does not disclose this fact in the m prospectus of the small cap venture fund This action is: o A) in violation of the Standard concerning disclosure of icts to clients and prospects w w B) in violation of the Standard concerning disclosure of additional compensation arrangements w C) not in violation of the Code and Standards Question #3 of 181 Betsy Fox is an investment advisor who has a client, Don Gordon, who is an employment lawyer At lunch, Fox noticed Gordon and the Chief Financial O cer of Blue Star Company at the next table She overhears them talking and ascertains that Blue Star is about to announce higher than expected earnings Before the earnings release, Gordon contacts Fox and asks her to purchase 3,000 shares for his portfolio Fox: https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83386079/print 1/79 10/11/2018 Learning Management System A) can only purchase shares for her personal account after informing all of her clients about the potential of the increase in earnings B) must refuse to purchase shares for Gordon C) can purchase shares for Gordon, but cannot ever purchase shares for her personal account Question #4 of 181 in According to CFA Institute Standards of Professional Conduct, which of the following plagiarism applies to written materials: A) and oral communications only B) only en tre statements about the prohibition against plagiarism is most correct? The prohibition against m Question #5 of 181 bo ok c C) oral communications, and telecommunications w w explicitly? o Which of the following activities would be following a component of the Code of Ethics A) Attending continuing education seminars on investing and inviting colleagues to come w along B) Consulting with colleagues about opinions you reach in your research C) Maintaining a list of colleagues who have violated the CFA Institute standards Question #6 of 181 The CFA Institute Code of Ethics speci es that CFA Institute Members and Candidates must all of the following EXCEPT: https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83386079/print 2/79 10/11/2018 Learning Management System A) use reasonable care and exercise independent professional judgment when engaging in professional activities B) refrain from any conduct that compromises the reputation or integrity of the CFA designation C) act with integrity, competence, diligence, respect, and in an ethical manner Which of the following is a component of the Code of Ethics? in Question #7 of 181 en tre A) Members shall not knowingly participate or assist in any violation of such laws, rules, or regulations B) Members shall not engage in any professional conduct involving dishonesty, fraud, deceit, or misrepresentation or commit any act that re ects adversely on their honesty, m Question #8 of 181 bo ok c hi f i l C) Members shall use reasonable care and exercise independent professional judgment .o Susan Nielsen, CFA, is an equity research analyst on a fact- nding property tour with other w w analysts to learn about Just Kittens, Inc Just Kittens sells tungsten ball-bearings and has 16 warehouses, and 20 manufacturing, research, and wholesale sales outlets scattered over countries – mostly emerging markets Because of the remote location of some of the facilities, w commercial travel is e ectively unavailable Just Kittens charters a jet and various busses to take the research analysts to the properties If Nielsen accepts these accommodations, she is most likely: A) not in violation of Standard I(B) "Independence and Objectivity" because commercial travel is e ectively unavailable B) in violation of Standard I(B) "Independence and Objectivity." C) not in violation of Standard I(B) "Independence and Objectivity" because best practices dictate that better access to company executives is likely to lead to more accurate and i l i f i https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83386079/print 3/79 10/11/2018 Learning Management System Question #9 of 181 The Securities and Exchange Board of India (SEBI) has just enacted a new stock-trading rule SEBI will give brokers a 10-day grace period, during which violators of the rule will be immediately noti ed and given a chance to remedy their situation to comply with the new rule If a CFA Institute member located in India or doing business in India unknowingly violates the rule and then remedies the situation within the 10-day grace period, has the member violated Standard I(A)? A) No, because the member remedied the situation en tre C) No, because the member unknowingly broke the rule .in B) Yes, because the member did not maintain knowledge and know of the rule bo ok c Question #10 of 181 All of the following are violations of Standard II(B) Market Manipulation EXCEPT: A) exploiting di erences in market ine ciencies B) securing a controlling interest in an equity security in order to in uence the price of a m related derivative instrument w w w technologies .o C) disseminating misleading information about the development of new products and Question #11 of 181 https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83386079/print 4/79 10/11/2018 Learning Management System The following information involves two research analysts at a brokerage rm Erik Bagenot, CFA, is preparing a research report on Global Enterprises, Inc In preparing the report, he uses materials from many sources For example, he uses factual information published by Standard & Poor's Corporation without acknowledging the source He also uses excerpts from a research report prepared by another analyst Bagenot makes only a slight change in wording for these excerpts, but acknowledges the source Sally Wain, who is currently enrolled in the CFA program, is preparing a research report on Manson Telecommunications She attends a conference in which several investment experts provide their views about the future prospects of this company Wain cites in several quotations from these investment experts in her report without speci c en tre reference According to CFA Institute Standards of Professional Conduct involving prohibition against plagiarism, which of the following statements is CORRECT? bo ok c A) Bagenot violated the Standards, but Wain did not B) Both Bagenot and Wain violated the Standards m C) Wain violated the Standards, but Bagenot did not .o Question #12 of 181 w w CFA Institute members are required to all of the following, EXCEPT: A) disclose, in writing, all observed violations of security laws and regulations to the proper w regulatory authorities B) inform their employer, clients, and potential clients of bene ts received for recommending products or services C) receive permission from both their employer and outside clients to engage in investment consulting outside the rm Question #13 of 181 https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83386079/print 5/79 10/11/2018 Learning Management System According to the Code of Ethics, a member re ects credit on the profession when a member: A) places the clients rst B) consults with other members on a regular basis C) practices in a professional and ethical manner Question #14 of 181 in According to the Code of Ethics, when practicing in a professional and ethical manner the goal A) increase membership in CFA Institute en tre is to: B) resolve icts between clients and employers Question #15 of 181 bo ok c C) re ect credit on members and the profession m Michael Malone, CFA, is an investment analyst for a large brokerage rm in New York who o covers the airlines industry After hours in his personal time, Malone maintains an online blog on which he expresses his personal opinions about various investment opportunities, including, w w but not limited to, the airlines industry On his blog, he posts a very negative investment opinion about WestAir stock Malone knows that WestAir's stock will be downgraded to a "sell" w by his rm next week Malone has most likely violated: A) Standard VI(B) Priority of Transactions B) violated Standard II(A) Material Nonpublic Information C) violated Standard IV(A) Loyalty Question #16 of 181 https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83386079/print 6/79 10/11/2018 Learning Management System An analyst is told by his supervisor that when he feels he should write a buy recommendation he is free to so, and when he feels he should write a sell recommendation he should check with the supervisor rst This practice is most likely: A) consistent with the Code of Ethics and Standards of Professional Conduct B) in violation of Standard I(B) Independence and Objectivity C) in violation of Standard V(B), Communications with Clients and Prospective Clients .in Question #17 of 181 en tre Jennifer Gates is an individual portfolio manager who only uses mutual funds for her clients; she has therefore never created a portfolio of stocks She enters an Internet chat room on investments and starts answering questions about investments She states in the chat room that she has a CFA designation One woman in particular is interested and questions her about bo ok c the viability of creating her own stock portfolio Gates feels that this would be a mistake because she only has $150,000 to invest, and states, "I have experience creating stock portfolios, and it does not make sense to so with only $150,000." The woman she has chatted with sends her an e-mail and eventually becomes a client of hers Gates has: m A) not violated the Standards .o B) violated the Standards by misrepresenting her experience w w w C) violated the Standards by soliciting business over the Internet Question #18 of 181 A government committee has concluded that investment company fees should be disclosed to clients each quarter and has proposed new legislation to require this Currently, the legal requirement is to report such data annually In compliance with current legal requirements, Dolphin Investments discloses its fees annually Eugene Shin, CFA, Dolphin's compliance o cer, learns of the proposed changes but does not convert Dolphin's reporting to a quarterly basis Shin's decision not to act: A) is not a violation of the Code and Standards B) is a violation of his duty to employer as de ned in the Code and Standards https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83386079/print 7/79 10/11/2018 Learning Management System C) constitutes professional misconduct as de ned in the Code and Standards Question #19 of 181 Which of the following statements about the responsibilities of CFA charterholders is CORRECT? CFA charterholders: A) are only obligated to comply with securities laws in the U.S B) must comply with the laws and rules governing their profession and must not engage in in any individual behavior that re ects adversely on the entire profession en tre C) need not comply with the laws and rules governing their profession or must not engage Question #20 of 181 bo ok c in any individual behavior that re ects adversely on the entire profession Andrea Waters is an investment analyst who has accumulated and analyzed several pieces of nonpublic information through her contacts with drug rms Although no one piece of the m information she collected is "material," Waters correctly concluded that the earnings of one of o the drug companies would be unexpectedly high in the coming year According to CFA Institute w w Standards of Professional Conduct, Waters: A) can use the information to make investment recommendations and decisions B) may use the information, but only after approval from a compliance o cer or w supervisor C) cannot legally invest or make recommendations based on this information Question #21 of 181 https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83386079/print 8/79 10/11/2018 Learning Management System Mark Williamson is "bearish" on ABC Manufacturing Company Williamson is so convinced that ABC is overpriced, two weeks ago, he shorted 100,000 shares Today, Williamson is "sur ng" several popular investment bulletin boards on the internet and posting false derogatory comments about company management According to Standard II(B), Market Manipulation, Williamson has engaged in: A) both transaction-based manipulation and information-based manipulation B) transaction-based manipulation, but not information-based manipulation .in C) information-based manipulation, but not transaction-based manipulation en tre Question #22 of 181 Steve Reese, CFA, an equity analyst for Bison Investments, has just completed his extensive research on the long-term prospects of ThetaCorp, a small technology rm that creates medical bo ok c software for hospitals and other medical clinics Reese has determined that the economic outlook for ThetaCorp warrants issuing a buy recommendation and has re ected this long-term view in his report which is being reviewed by Bison's compliance department The head of Bison's investment banking department, Mark Hazel, CFA, learned of the report and called Reese to suggest that he increase his recommendation to a strong-buy in an e ort to support m Bison's bid to be retained as the lead underwriter for an upcoming bond issue by ThetaCorp .o Hazel explained that the level of risk that Reese has assigned to ThetaCorp is too high and that with a slight downward adjustment, a strong-buy recommendation would be justi ed Reese w w agreed to the adjustment and updated his report which he then resubmitted to the compliance department which gave its o cial approval for distribution According to CFA Institute w Standards of Professional Conduct, which of the following is CORRECT? Reese has: A) not violated the Standards since he has reasonable basis to support a strong-buy recommendation B) violated the Standards by failing to deal fairly with all of Bison Investments’ clients C) violated the Standards by failing to maintain his independence and objectivity Lin Liu, a Level III candidate, sat for the CFA examination in June in Hong Kong Liu was very nervous before and during the exam because she did not study the material as well as she had https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83386079/print 9/79 10/11/2018 Learning Management System planned She feels particularly weak in the use of complex derivatives to modify portfolio risk and return and hopes the exam will not have many questions on that topic Liu arrived at the exam center very early and planned to some last minute studying in the exam room She had a large backpack with her that contained all of her study notes When she arrived at the exam center, the proctor who was checking candidates in at the door told Liu that she could not bring her backpack or study notes into the exam room but would need to leave them somewhere outside the exam center Liu left the exam room and continued to study until the very last minute She didn't know where to leave her backpack She remembered that there was a small closet in the Ladies Lavatory, which was just outside the exam room She decided in to leave her backpack and notes hidden there Liu showed her current passport and approved calculator to the proctor and was sent to her en tre assigned seat She was seated at the end of a row with another candidate to her right Wang Chou, lead proctor, read the opening statement to candidates as the exam booklets were distributed Wang cautioned candidates not to open the exam booklet until he instructed them bo ok c to so When Masako Yamasaki, the section proctor, distributed the exam booklets, Liu quickly opened hers and began to read the rst question Yamasaki rushed over and told Liu to close her exam booklet until Wang instructed candidates to open the booklets Liu closed her book and waited patiently for Wang to make his announcement When instructed to open her booklet, Liu m quickly began taking the exam Liu's actions at the start of the exam cause Yamasaki to pay o close attention to her during the exam About 50 percent of the morning session consisted of questions about derivatives Liu became w w increasingly nervous about her ability to answer these questions correctly She remembered that she had left her notes in the Ladies Lavatory and decided she had nothing to lose by going w to the lavatory and looking at her notes She raised her hand and received permission from Yamasaki to go to the lavatory She retrieved her notes from the closet where she had hidden them when Yamasaki entered the lavatory and found her with her notes Yamasaki informed Liu that she would scate the notes and inform the CFA Institute of Liu's actions in a proctor report Liu then gathered her belongings and left the exam center Question #23 of 181 Are CFA candidates subject to the same disciplinary action for violations of the CFA Institute Code of Ethics and Standards of Professional Conduct (Code and Standards) for their actions during the CFA examination as other members of the CFA Institute? https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83386079/print 10/79 10/11/2018 Learning Management System article, the chairman of the local CFA Society board called Ovitz to thank her for doing such an excellent job of maintaining the prestigious image of the CFA designation Question #144 of 181 By developing the quantitative model to select stocks in the industrial sector, did Gonzales violate any CFA Institute Standards of Professional Conduct? A) Yes, because the underlying premise of the model is not based on adequate research or a reasonable basis .in B) Yes, because the basic model is the property of his former employer and Gonzales has not obtained permission to use the model bo ok c Question #145 of 181 en tre C) No In his rst report on investments in the industrial sector, did Gonzales's description of the stock selection model or its historical results violate any CFA Institute Standards of Professional m Conduct? B) No w C) Yes w w A) No Historical results o Model description No Yes Yes Question #146 of 181 In his rst report on investments in the industrial sector, did Gonzales's three investment recommendations violate any CFA Institute Standards of Professional Conduct? A) Yes, because he provided an inherent guarantee of investment performance that cannot reasonably be expected https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83386079/print 65/79 10/11/2018 Learning Management System B) Yes, because he failed to distinguish between fact and opinion with regard to expected performance C) No, since he performed su cient back- testing providing evidence the model is able to predict winning stocks in the industrial sector Question #147 of 181 With regard to his record retention actions and his reissuance of past investment Past recommendations No B) No No C) No Yes m Question #148 of 181 bo ok c A) Yes en tre Record retention in recommendations, has Gonzales violated any CFA Institute Standards of Professional Conduct? o Does the referral arrangement between StatInvest and Ryers & Ovitz Inc violate any CFA w w Institute Standards of Professional Conduct? A) Yes, because the referral arrangement is not properly disclosed to clients and prospects w of Ryers & Ovitz Inc B) No C) Yes, because Ryers & Ovitz pays for the research out of a general overhead account, which disadvantages some clients Question #149 of 181 In her dealings with the local media, has Ovitz violated any CFA Institute Standards of Professional Conduct? https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83386079/print 66/79 10/11/2018 Learning Management System A) Yes, because her comments regarding her disagreement with CFA Institute policies compromise the reputation of the organization B) No C) Yes, because she has improperly exaggerated the meaning of the CFA designation Question #150 of 181 Rory Deal recently passed Level III of the CFA exam and just started his rst job as an in investment advisor for an asset management rm He conscientiously maintains records of changes in security regulations to comply with standard I(A) Knowledge of the Law when he en tre notices his colleagues are not keeping similar records and he does not say anything Is this a violation of Standard I(A)? A) Yes, and Deal should disassociate from his colleagues bo ok c B) No m C) Yes, because he is bound by the Code of Ethics .o Question #151 of 181 w w What is the rule of thumb for members, CFA charterholders and candidates in the CFA program when weighing the requirements of the CFA Institute Code and Standards and the w requirements of local laws? If the applicable laws are: A) more strict, they must still follow the Code and Standards B) more strict, they must adhere to the applicable laws C) less strict, they should make a judgment call on which to follow, the Code and Standards or the local laws and requirements Question #152 of 181 All of the following violate Standard I(C), Misrepresentation, EXCEPT: https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83386079/print 67/79 10/11/2018 Learning Management System A) citing quotes attributable to "investment experts" without speci c references B) presenting factual information published by recognized statistical reporting services without acknowledgment C) copying a proprietary computerized spreadsheet without seeking authorization from the creators Question #153 of 181 in Roberta Conn is an investment advisor who has a client, Ernie Ray, who is a tax lawyer At lunch, Conn noticed Ray and the Chief Financial O cer of CDH Company at the next table She en tre overhears them talking and ascertains that CDH is about to announce higher than expected earnings Before the earnings release, Ray contacts Conn and asks her to purchase 3,000 shares for his portfolio Conn: bo ok c A) must wait until after she purchases the 3,000 shares for Ray to purchase shares for her personal account B) can purchase shares for Ray, but cannot ever purchase shares for her personal account .o m C) must refuse to purchase the shares for Ray w w Question #154 of 181 Lawrence Kelly is the Chief Investment O cer at a money management company that claims it w is in compliance with CFA Institute Soft Dollar Standards For the rst time, the company has purchased securities in the country of Santa Rosa He learns that under Santa Rosen law, one of the company's soft dollar policies is forbidden, yet to conform with the law, Lawrence would have to violate the Soft Dollar Standards, but not the Standards of Professional Conduct Lawrence: A) must follow the Santa Rosen Law and cease claiming compliance with CFA Institute Soft Dollar Standards B) must follow the CFA Institute Soft Dollar Standards, informing the Santa Rosen regulators of his reasons https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83386079/print 68/79 10/11/2018 Learning Management System C) should follow the Santa Rosen Law and can still claim compliance with CFA Institute Soft Dollar Standards Question #155 of 181 A stockbroker who is a CFA Institute member is called on the telephone by the CEO of a large company The CEO asks to buy shares of the CEO's company for the accounts of the CEO's children In the course of the conversation, the CEO says this will really pay o when the in upcoming takeover goes through The stockbroker checks her sources and nds no information about the takeover In this case the broker should: en tre A) only execute the order in compliance with Standard III(A), Loyalty, Prudence, and Care Since the client is buying the stock for the children, there is not a problem B) execute the order for all clients as required by Standard III(B), Fair Dealing m Question #156 of 181 bo ok c C) neither of the actions listed here .o Don Benjamin, CFA, is the compliance o cer for a large brokerage rm He wants to prevent the communication of material nonpublic information and other sensitive information from his w w rm's investment banking and corporate nance departments to its sales and research departments The most common and widespread approach that Benjamin can use to prevent w insider trading by employees is the: A) Wall Street Rule B) re wall C) legal list Question #157 of 181 https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83386079/print 69/79 10/11/2018 Learning Management System Susan Nielsen, CFA, works for a rating agency which competes directly with S&P and Moody's Her friend, Lance Parker, works for the same company but in a di erent department which is involved in advisory services for structured products Nielsen frequently receives pressure from Parker to "put a positive face" on client ratings to help him sell advisory services She is reluctant to discuss client ratings with Parker and tries to avoid the topic She consults her company's compliance department and learns that there are no policies or procedures to discourage Nielsen and Parker from sharing information and is encouraged to consider his advice on company ratings Nielsen should most likely: A) continue to consult with Parker on company ratings as the compliance department’s in position is that there is no ict B) advise regulators of the potential ict of interest and seek legal counsel en tre C) advise her rm to develop rewalls and protections to allow the di erent departments Question #158 of 181 bo ok c to function independently and avoid talking with Parker about client ratings Which of the following is a component of the Code of Ethics? CFA Institute members shall: m A) use reasonable care and exercise independent professional judgment .o B) not knowingly participate or assist in any violation of laws, rules, or regulations w w w C) use particular care in determining applicable duciary duty Question #159 of 181 Which of the following statements regarding disciplinary procedures is least accurate? A) A review panel is created from Disciplinary Review Committee members B) If the CFA member or candidate rejects the sanction, the charges and sanctions may be reviewed C) The sanctions imposed by the Professional Conduct sta are nal and conclusive https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83386079/print 70/79 10/11/2018 Learning Management System Question #160 of 181 Don Roberts, a CFA Institute member, resides in Country L, where the securities laws and regulations are less strict than the CFA Institute Code and Standards Roberts also does business in Country N, which has no securities laws or regulations Thus, Country N has no laws prohibiting the use of material nonpublic information Roberts has clients in both Country L and N Country L's law states that the law of the locality where business is conducted governs According to CFA Institute Standards of Professional Conduct about the use of material nonpublic information, Roberts may: A) take investment action based on this information only for his clients in Country N but in not for his clients in Country L or himself B) take investment action based on this information for clients in both Country N and en tre Country L and for himself Question #161 of 181 bo ok c C) not take investment action on the basis of this information All of the following are components of the Code of Ethics EXCEPT: o reports m A) demonstrating diligence, independence, and thoroughness when preparing investment w w B) striving to maintain and improve their competence and the competence of others in the profession w C) using reasonable care and exercising independent professional judgment Question #162 of 181 Robe Advisory Services operates an o ce in San Francisco, where it manages portfolios for its clients based in the United States The rm also maintains an o ce in Tokyo, where it employs Sam Lee, CFA who researches Japanese stocks According to the CFA Institute Standards of Professional Conduct, Lee is required to maintain knowledge of and comply with all applicable laws, rules, and regulations in: https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83386079/print 71/79 10/11/2018 Learning Management System A) Japan, but not the U.S., and the CFA Institute Standards of Professional Conduct B) both the U.S and Japan, but not the CFA Institute Standards of Professional Conduct C) both the U.S and Japan and the CFA Institute Standards of Professional Conduct Question #163 of 181 The Standards of Professional Conduct explicitly outlines responsibilities to four groups Which in of the following is NOT a group mentioned in that list? A) The profession en tre B) The Federal Reserve Question #164 of 181 bo ok c C) The investing public Wes Smith, CFA, has been working toward the completion of a Master of Science in Finance He m has passed all the necessary courses and written the necessary thesis He still must defend the thesis in one month Smith's thesis advisor assures him that he will pass the thesis defense .o Smith has new business cards printed with "M.S in Finance" after his name This is a violation w w of: A) Standard I(C), Misrepresentation w B) Standard VII(B), Reference to CFA Institute, the CFA Designation, and the CFA Program C) none of the Standards if Smith does not make the cards public until after he defends his thesis and receives his degree Question #165 of 181 According to the CFA Institute Code of Ethics, CFA Institute members shall: https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83386079/print 72/79 10/11/2018 Learning Management System A) act with integrity, competence, diligence, respect, and in an ethical manner when dealing with the public, clients, prospective clients, employers, employees, colleagues in h i f i d h i i i h l b l i l k B) maintain knowledge and comply with all applicable laws, rules and regulations C) preserve the dentiality of information communicated by clients, prospects, or employers concerning investment matters Question #166 of 181 in According to the Code of Ethics, which of the following statements is NOT correct? CFA Institute en tre members are required to: A) comply with the CFA Institute Global Investment Performance Standards B) maintain and improve their competence and strive to maintain the competence of bo ok c others in the profession C) use reasonable care and exercise independent professional judgment m Question #167 of 181 o Kevin Lowell, CFA, manages a pension plan for a national grocery retailer All of the following w w are required as a part of Lowell's duciary duties, EXCEPT: A) place the client’s interest before the employer’s interest w B) support the sponsor's management during proxy ghts C) act in a prudent and judicious manner Question #168 of 181 A money manager works for a full-service brokerage rm After meeting with a new client and gathering all relevant information, the money manager says that she thinks her rm can perform all the nancial services the new client needs With respect to Standard I(C), Misrepresentation, this: https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83386079/print 73/79 10/11/2018 Learning Management System A) may not be a violation if the representation was made orally B) is a violation because she cannot make statements like this under any circumstances C) may not be a violation if the manager's opinion is based upon the factual information gathered Question #169 of 181 following? B) Act with integrity Question #170 of 181 bo ok c C) Re ect credit on the profession en tre A) Actively lobby for new laws to protect the public .in The Code of Ethics does NOT explicitly say that a CFA Institute member shall which of the m Lee Roth, who is an investment advisor, is riding in a taxi and nds a le of information labeled "Genco Valuation." The folder contains a great deal of nancial data, projections and nonpublic o information concerning the food products industry that lead Roth to believe that Genco will be w w worth 50% more than its current stock value Roth also nds some correspondence that leads him to believe that the le belonged to Tom Hagan Roth tries to nd out where Hagan works w so he can return the le Roth can recommend Genco to his clients unless Hagan works for: A) Roth cannot recommend Genco to his clients at this time B) the corporate nance department for Genco C) the equity research department for a brokerage rm Question #171 of 181 https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83386079/print 74/79 10/11/2018 Learning Management System An analyst has been writing research reports on a company for many years As part of the analyst's continuing research e orts, the analyst allows the rm to y him to the rm's headquarters and put him up in the guest quarters the company has for all corporate visitors According to Standard I(B), Independence and Objectivity, this is: A) a violation if the headquarters are within reasonable driving distance from the analyst's home B) a violation no matter what the circumstances .in C) not a violation under any circumstances en tre Question #172 of 181 All of the following are violations of Standard I(D), Misconduct, EXCEPT: A) any conduct that undermines dence that the CFA charter represents a level of bo ok c achievement based on merit and ethical conduct B) conviction of a crime involving fraud C) conviction of a misdemeanor involving civil disobedience in support of one’s personal o m beliefs w w Question #173 of 181 w Which one of the following least accurately describes the CFA Institute Standard about using material nonpublic information? A) An analyst may use nonmaterial nonpublic information as long as it has been developed under the Mosaic Theory B) An analyst using material nonpublic information may be ned by CFA Institute C) An analyst may violate this Standard by passing information to others even when it has been obtained from outside the company https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83386079/print 75/79 10/11/2018 Learning Management System Question #174 of 181 Bob Smith, CFA, is an independent board member of Atlantic Technologies, but is not paid by the rm for his services An employee at Atlantic informs Smith that Atlantic has improperly timed the booking of contracts to achieve the desired quarterly nancial results The misleading nancial statements would turn losses into pro ts Smith confers with the rm's legal counsel who indicates that this conduct is, in fact, illegal Smith urges Sharon White, Atlantic's chief nancial executive, to change the nancial statements, but she refuses to so and indicates the rm's external auditors have approved the method of revenue recognition she has used According to CFA Institute Standards of Professional Conduct, which of the following actions is B) Report the illegal activity to CFA Institute en tre A) Bring his concerns to the other board members .in least likely appropriate for Smith: in this situation? C) Dissociate from the activity by resigning as a director or by reporting the activities to the Question #175 of 181 bo ok c appropriate authorities m According to the Code of Ethics, the professional judgment of a member should be: o A) guided by the SEC guidelines w w B) dependent on that of his/her colleagues w C) independent Question #176 of 181 Which of the following is NOT part of the CFA Institute Code of Ethics? A) Competence B) Contractual provisions C) Independent judgment https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83386079/print 76/79 10/11/2018 Learning Management System Question #177 of 181 Bob Blanford, CFA, is an investment analyst for a large global brokerage rm He recently moved to Ragatan, a developing country with few securities laws and regulations As part of conducting a company analysis, Blanford interviews Ravi Shanti, vice-president of nance at Starr Industries Starr is a major industrial rm in Ragatan and a client at Blanford's rm Based on his analysis, Blanford suspects that Shanti may have deliberately overstated Starr's current earnings and its earnings for the past several quarters If this information becomes public, Blanford believes that Starr's stock price will drop substantially Blanford suspects that Shanti may have violated Ragatan's securities laws Which of the following statements is least likely to in comply with Standard I, Professionalism? Blanford should: A) determine the legality of the activity, possibly by consulting counsel en tre B) disassociate himself from the client, if the activity is illegal or unethical Question #178 of 181 bo ok c C) take no action Harold Klein, CFA, is an expert on ethical conduct in the investment banking industry and has m been asked by an association of investment bankers to give a presentation on interpreting codes of ethics and standards of practice such as the CFA Institute Code of Ethics and o Standards of Professional Conduct In his presentation, Klein makes two key points: w w Sound ethical judgment requires careful and thoughtful application of ethical standards which are precise and exacting in nature w An ethical professional must begin the ethical decision making process by determining the applicable code and standards that govern the situation Determine whether Klein's statements are correct or incorrect and state your conclusion Statement Statement A) Incorrect Correct B) Incorrect Incorrect C) Correct Correct https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83386079/print 77/79 10/11/2018 Learning Management System Question #179 of 181 Sometimes a CFA Institute member simply feels a law has been violated by his rm, and sometimes the member knows a law has been violated Which of the following pairs of guidelines is CORRECT with respect to the rst step a member should take in each case? The member should rst contact: A) the rm's counsel if he feels a law has been violated and contact his supervisor if he knows a law has been violated B) the rm's counsel if he feels a law has been violated and the SEC if he knows a law has been violated .in C) his supervisor in the rm if he feels a law has been violated and contact the rm's bo ok c Question #180 of 181 en tre counsel if he knows a law has been violated Which of the following actions is least likely to prevent the misuse of insider information? A) Controlling relevant interdepartmental information m B) Monitoring all the phone calls made by the brokers C) Placing securities on a restricted list when the rm is in possession of material w w w o nonpublic information Question #181 of 181 Nancy Hall, a candidate in the CFA program, is an analyst for a mutual fund As part of her job she makes company visits to interview executives On a recent trip she stayed with her sister instead of at a hotel In her expenses Hall included a hotel charge of $100, which was less than the amount allowed by her employer After receiving a check for her expenses, Hall disclosed to her supervisor that she had stayed with her sister instead of at a hotel She also returned the $100 to her employer According to CFA Institute Standards of Professional Conduct, which of the following statements best describes Hall's professional conduct? https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83386079/print 78/79 10/11/2018 Learning Management System A) Hall did not engage in professional misconduct because she did not meet all of the requirements to use the CFA designation B) Hall engaged in professional misconduct C) Hall did not engage in professional misconduct because she eventually disclosed this w w w o m bo ok c en tre in information and returned the $100 to her employer https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83386079/print 79/79 ... found in the Code of Standards and Standards of Professional Conduct are clear-cut and unambiguous C) Once the relevant sections of the Code of Ethics and Standards of Professional Conduct have... disciplinary action for violations of the CFA Institute Code of Ethics and Standards of Professional Conduct (Code and Standards) for their actions during the CFA examination as other members of the CFA. .. https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495 925 615 029 a3fd/practice /qbank/ 24 038 518 /quiz/ 833 86079/print 12 /79 10 /11 /2 018 Learning Management System Question #28 of 18 1 After she received