ETHICS AND TRUST IN THE
INVESTMENT PROFESSION AND CODE
OF ETHICS AND STANDARDS OF
PROFESSIONAL CONDUCT QUESTIONS
AND ANSWERS WITH SOLUTIONS 2024
The top two attributes of an investment management firm are? - ANSWER · having a transparent and
open business practice
· have ethical business practices
Ethics can be described as? - ANSWER · as a set of moral principles and rules of conduct that provide
guidance for our behavior
as behavior that balances ones own interests with the direct and indirect consequences of the behavior
on others (stakeholders)
code of conduct - ANSWER a written set of principles that guides the ethical behavior of a company and
its employees
How do professions establish trust? - ANSWER · professions normalize practitioner behavior by
developing professional codes and standards
· professions provide a service to society
· professions are client focused
· professions have high entry standards
· all members of a profession possess a body of expert knowledge
· professions encourage and facilitate continuing education
· professions monitor professional conduct to maintain integrity and reputation of an industry
· professions are collegial and respect the rights, dignity, and autonomy of others
· professions are recognized oversight bodies
· professions encourage the engagement of members to develop expertise and ethics and to advance the
profession
, What is the key in investment management? - ANSWER · trust is the key in investment management and
the trust is established by acting with care, due diligence, and judgment for clients
· when market participants trust investment management professionals, it leads to efficient capital
market and smooth functioning which in turn helps in the development of the economy
CFA Candidates and chart holders must? - ANSWER · meet the highest standards among those
established by CFA institute, regulators, or the employer
· CFA code and standards aims at aligning the interests of firms and clients
· adhere to the code and standards and to sign annually a statement attesting to that continued
adherence
· must maintain and improve their professional competence and strive to maintain and improve the
competence of other investment professionals
situational influences to ethical conduct (3) - ANSWER · these are external factors such as cultural, social,
and environmental factors that influence one's thinking, behavior, and decision making
· money and prestige push people to act in their own self interests and take actions that are less ethical
· loyalty to employer, employee, and colleagues can have both positive and negative effects
· compliance culture- a strong compliance policy is important for ethical decision-making however,
process is focused solely on compliance oversimplified decision making and do not help the larger cause
four possible outcomes for any action from a legal and ethical perspective - ANSWER · not legal but
ethical: for example, civil disobedience or protesting peacefully against an issue may not be legal, but it is
ethical
· not legal and not ethical
· legal and ethical
· legal but not ethical
why are laws not sufficient to ensure ethical conduct among market participants? (3) - ANSWER · laws
and regulations are often created in response to existing market practices
· laws can be interpreted differently- market participants may choose to interpret the law to their
advantage or delay compliance where there is no punitive action
· laws can vary across jurisdictions- this may encourage questionable practice to move to places that are
less restrictive in nature
INVESTMENT PROFESSION AND CODE
OF ETHICS AND STANDARDS OF
PROFESSIONAL CONDUCT QUESTIONS
AND ANSWERS WITH SOLUTIONS 2024
The top two attributes of an investment management firm are? - ANSWER · having a transparent and
open business practice
· have ethical business practices
Ethics can be described as? - ANSWER · as a set of moral principles and rules of conduct that provide
guidance for our behavior
as behavior that balances ones own interests with the direct and indirect consequences of the behavior
on others (stakeholders)
code of conduct - ANSWER a written set of principles that guides the ethical behavior of a company and
its employees
How do professions establish trust? - ANSWER · professions normalize practitioner behavior by
developing professional codes and standards
· professions provide a service to society
· professions are client focused
· professions have high entry standards
· all members of a profession possess a body of expert knowledge
· professions encourage and facilitate continuing education
· professions monitor professional conduct to maintain integrity and reputation of an industry
· professions are collegial and respect the rights, dignity, and autonomy of others
· professions are recognized oversight bodies
· professions encourage the engagement of members to develop expertise and ethics and to advance the
profession
, What is the key in investment management? - ANSWER · trust is the key in investment management and
the trust is established by acting with care, due diligence, and judgment for clients
· when market participants trust investment management professionals, it leads to efficient capital
market and smooth functioning which in turn helps in the development of the economy
CFA Candidates and chart holders must? - ANSWER · meet the highest standards among those
established by CFA institute, regulators, or the employer
· CFA code and standards aims at aligning the interests of firms and clients
· adhere to the code and standards and to sign annually a statement attesting to that continued
adherence
· must maintain and improve their professional competence and strive to maintain and improve the
competence of other investment professionals
situational influences to ethical conduct (3) - ANSWER · these are external factors such as cultural, social,
and environmental factors that influence one's thinking, behavior, and decision making
· money and prestige push people to act in their own self interests and take actions that are less ethical
· loyalty to employer, employee, and colleagues can have both positive and negative effects
· compliance culture- a strong compliance policy is important for ethical decision-making however,
process is focused solely on compliance oversimplified decision making and do not help the larger cause
four possible outcomes for any action from a legal and ethical perspective - ANSWER · not legal but
ethical: for example, civil disobedience or protesting peacefully against an issue may not be legal, but it is
ethical
· not legal and not ethical
· legal and ethical
· legal but not ethical
why are laws not sufficient to ensure ethical conduct among market participants? (3) - ANSWER · laws
and regulations are often created in response to existing market practices
· laws can be interpreted differently- market participants may choose to interpret the law to their
advantage or delay compliance where there is no punitive action
· laws can vary across jurisdictions- this may encourage questionable practice to move to places that are
less restrictive in nature
