CAIA TEST PAPER QUESTIONS AND
SOLUTIONS VERIFIED ANSWERS
●● Standard I(B)- Independence and Objectivity
Answer: Use reasonable care and judgement to achieve and maintain
independence and objectivity in their professional activities. Must not
offer, solicit, or accept any gifts, benefit, compensation or consideration
that reasonably could be expected to compromise their own or another
independence and objectivity
●● Standard I(C)- Misrepresentations
Answer: Must not knowingly make any misrepresentations relating to
investment analysis, recommendations actions or other professional
activities
●● Standard I(D) Misconduct
Answer: 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
●● Standard II: Integrity of Capital Markets
Answer: A. Material Nonpublic Information
B. Market Manipulation
,●● Standard I: Professionalism
Answer: A. Knowledge of the Law
B. Independence and Objectivity
C. Misrepresentation
D. Misconduct
●● Standard II(A) Material Nonpublic Information
Answer: Members and Candidates who possess material nonpublic
information that could affect the value of an investment must not act or
cause others to act on the information.
●● Standard II B - Market Manipulation
Answer: Members must not engage in practices that distort prices or
artificially inflate volume with the intent to mislead market participants
●● Standard III: Duties to Clients
Answer: A. Loyalty, Prudence, and Care
B. Fair Dealing
C. Suitability
D. Performance Presentation
E. Preservation of Confidentiality
●● Standard III(A) - Loyalty, Prudence, and Care
,Answer: Members and Candidates have a duty of loyalty to their clients
and must act with reasonable care and exercise prudent judgment.
Members and Candidates must act for the benefit of their clients and
place their clients' interests before their employer's or their own
interests.
●● Standard III(B) Fair Dealing
Answer: Members and Candidates must deal fairly and objectively with
all clients when providing investment analysis, making investment
recommendations, taking investment action, or engaging in other
professional activities.
●● Standard III(C) Suitability
Answer: When Members and Candidates are in an advisory relationship
with a client, they must:
Make a reasonable inquiry into a client's or prospective client's
investment experience, risk and return objectives, and financial
constraints prior to making any investment recommendation or taking
investment action and must reassess and update this information
regularly.
Determine that an investment is suitable to the client's financial situation
and consistent with the client's written objectives, mandates, and
constraints before making an investment recommendation or taking
investment action.
, Judge the suitability of investments in the context of the client's total
portfolio.
When Members and Candidates are responsible for managing a portfolio
to a specific mandate, strategy, or style, they must make only investment
recommendations or take only investment actions that are consistent
with the stated objectives and constraints of the portfolio.
●● Standard III(D) Performance Presentation
Answer: When communicating investment performance information,
Members and Candidates must make reasonable efforts to ensure that it
is fair, accurate, and complete.
●● Standard III(E) Preservation of Confidentiality
Answer: Members and Candidates must keep information about current,
former, and prospective clients confidential unless:
The information concerns illegal activities on the part of the client;
Disclosure is required by law; or
The client or prospective client permits disclosure of the information.
SOLUTIONS VERIFIED ANSWERS
●● Standard I(B)- Independence and Objectivity
Answer: Use reasonable care and judgement to achieve and maintain
independence and objectivity in their professional activities. Must not
offer, solicit, or accept any gifts, benefit, compensation or consideration
that reasonably could be expected to compromise their own or another
independence and objectivity
●● Standard I(C)- Misrepresentations
Answer: Must not knowingly make any misrepresentations relating to
investment analysis, recommendations actions or other professional
activities
●● Standard I(D) Misconduct
Answer: 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
●● Standard II: Integrity of Capital Markets
Answer: A. Material Nonpublic Information
B. Market Manipulation
,●● Standard I: Professionalism
Answer: A. Knowledge of the Law
B. Independence and Objectivity
C. Misrepresentation
D. Misconduct
●● Standard II(A) Material Nonpublic Information
Answer: Members and Candidates who possess material nonpublic
information that could affect the value of an investment must not act or
cause others to act on the information.
●● Standard II B - Market Manipulation
Answer: Members must not engage in practices that distort prices or
artificially inflate volume with the intent to mislead market participants
●● Standard III: Duties to Clients
Answer: A. Loyalty, Prudence, and Care
B. Fair Dealing
C. Suitability
D. Performance Presentation
E. Preservation of Confidentiality
●● Standard III(A) - Loyalty, Prudence, and Care
,Answer: Members and Candidates have a duty of loyalty to their clients
and must act with reasonable care and exercise prudent judgment.
Members and Candidates must act for the benefit of their clients and
place their clients' interests before their employer's or their own
interests.
●● Standard III(B) Fair Dealing
Answer: Members and Candidates must deal fairly and objectively with
all clients when providing investment analysis, making investment
recommendations, taking investment action, or engaging in other
professional activities.
●● Standard III(C) Suitability
Answer: When Members and Candidates are in an advisory relationship
with a client, they must:
Make a reasonable inquiry into a client's or prospective client's
investment experience, risk and return objectives, and financial
constraints prior to making any investment recommendation or taking
investment action and must reassess and update this information
regularly.
Determine that an investment is suitable to the client's financial situation
and consistent with the client's written objectives, mandates, and
constraints before making an investment recommendation or taking
investment action.
, Judge the suitability of investments in the context of the client's total
portfolio.
When Members and Candidates are responsible for managing a portfolio
to a specific mandate, strategy, or style, they must make only investment
recommendations or take only investment actions that are consistent
with the stated objectives and constraints of the portfolio.
●● Standard III(D) Performance Presentation
Answer: When communicating investment performance information,
Members and Candidates must make reasonable efforts to ensure that it
is fair, accurate, and complete.
●● Standard III(E) Preservation of Confidentiality
Answer: Members and Candidates must keep information about current,
former, and prospective clients confidential unless:
The information concerns illegal activities on the part of the client;
Disclosure is required by law; or
The client or prospective client permits disclosure of the information.
