]
ETHIC QUESTIONS
FROM CFA||COMPLETE
VERIFIED ANSWERS||
100% CORRECT.
1. Module 1:
2. Which of the following best identifies an internal trait that may lead to poor
ethical decision making?
A. Overconfidence
B. Loyalty to employer
C. Promise of money or prestige: A. Overconfidence
3. 7. Situational influences in decision making will most likely be minimized if:
A. strong compliance programs are in place.
B. longer-term consequences are considered.
C. individuals believe they are truthful and honest.: B. longer-term conse-
quences are considered
4. Decision makers who use a compliance approach are most likely to:
A. avoid situational influences.
B. oversimplify decision making.
C. consider consider more factors than when using an ethical decision-mak-
ing approach.
11. An ethical decision-making framework will most likely:
A. include a pre-determined, uniform sequence.
B. focus exclusively on confirmable facts and relationships.
,C. help avoid a decision that has unanticipated ethical consequences: B.
oversimplify decision making.
A compliance approach can oversimplify decision making and may not encourage
decision makers to consider the larger picture. A strong compliance culture may be
a good start in developing an ethical culture but can become another situational
influence that may result in employees failing to consider other important factors.
C. help avoid a decision that has unanticipated ethical consequences
Using an ethical decision-making framework consistently will help you develop
sound judgment and decision-making skills and avoid making decisions that have
unanticipated ethical consequences. The decision-making process is often iterative,
and the decision maker may move between phases of the framework. A decision
,maker should consider more than confirmable facts and relationships; for example,
the decision maker should consider situational influences and personal biases.
5. 12. When an ethical dilemma occurs, an investment professional should
most likely first raise the issue with a:
A. mentor outside the firm.
B. professional body's hotline.
C. senior individual in the firm.: C. senior individual in the firm.
When a dilemma occurs, raising an issue internally with a senior employee is often
a good starting place and creates an opportunity for an independent internal review.
Protecting the client and the firm may take priority over the position of an individua
professional raising a concern.
6. Module 2:
7. 4. As stated in the revised 11th edition, the Standards of Professional
Conduct:
A. require supervisors to focus on the detection and prevention of violations.
B. adopt separate ethical considerations for programs such as CIPM and
Investment Foundations.
C. address the risks and limitations of recommendations being made to
clients.
6. Which of the following statements best describes an aspect of the Stan-
dards of Professional Conduct? Members and candidates are required to:
A. ensure any portfolio mandate followed is fair, accurate, and complete.
B. promptly disclose changes that might materially affect investment process-
es.
C. have a reasonable and adequate basis for decisions about client confiden-
tiality.
7. Which of the following responses most completely represents an ethical
principle of CFA Institute as outlined in the Standards of Practice Handbook?
A. Individual professionalism B. Responsibilities to clients and employers C.
Ethics involved in investment analysis and recommendations: C. address the
risks and limitations of recommendations being made to clients.
, B. promptly disclose changes that might materially affect investment processes
A. Individual professionalism
8. 8. A CFA Institute member would violate the standard for material nonpublic
information by:
A. conducting price distortion practices.
B. inappropriately causing others to act.
C. inadequately maintaining investment records.
11. The Duties to Employers standard states that members and candidates
must not:
A. accept any gifts that might compromise their independence and objectivity.
B. deprive their employer of their skills and abilities as related to their employ-
ment.
C. accept compensation competing with their employer's interest and with the
written consent of all parties involved.
12. The Investment Analysis, Recommendations, and Actions standard states
that members and candidates must:
A. find an investment suitable for their client before making a recommenda-
tion.
B. make reasonable efforts to ensure that performance presentation is fair,
accurate, and complete.
C. distinguish between fact and opinion in the presentation of investment
analysis and recommendations.
13. Based on the Conflicts of Interest standard, members and candidates
must:
A. disclose, as required by law, those conflicts interfering with their profes-
sional duties.
B. disclose, as appropriate, any benefit paid to others for the recommendation
of products.
ETHIC QUESTIONS
FROM CFA||COMPLETE
VERIFIED ANSWERS||
100% CORRECT.
1. Module 1:
2. Which of the following best identifies an internal trait that may lead to poor
ethical decision making?
A. Overconfidence
B. Loyalty to employer
C. Promise of money or prestige: A. Overconfidence
3. 7. Situational influences in decision making will most likely be minimized if:
A. strong compliance programs are in place.
B. longer-term consequences are considered.
C. individuals believe they are truthful and honest.: B. longer-term conse-
quences are considered
4. Decision makers who use a compliance approach are most likely to:
A. avoid situational influences.
B. oversimplify decision making.
C. consider consider more factors than when using an ethical decision-mak-
ing approach.
11. An ethical decision-making framework will most likely:
A. include a pre-determined, uniform sequence.
B. focus exclusively on confirmable facts and relationships.
,C. help avoid a decision that has unanticipated ethical consequences: B.
oversimplify decision making.
A compliance approach can oversimplify decision making and may not encourage
decision makers to consider the larger picture. A strong compliance culture may be
a good start in developing an ethical culture but can become another situational
influence that may result in employees failing to consider other important factors.
C. help avoid a decision that has unanticipated ethical consequences
Using an ethical decision-making framework consistently will help you develop
sound judgment and decision-making skills and avoid making decisions that have
unanticipated ethical consequences. The decision-making process is often iterative,
and the decision maker may move between phases of the framework. A decision
,maker should consider more than confirmable facts and relationships; for example,
the decision maker should consider situational influences and personal biases.
5. 12. When an ethical dilemma occurs, an investment professional should
most likely first raise the issue with a:
A. mentor outside the firm.
B. professional body's hotline.
C. senior individual in the firm.: C. senior individual in the firm.
When a dilemma occurs, raising an issue internally with a senior employee is often
a good starting place and creates an opportunity for an independent internal review.
Protecting the client and the firm may take priority over the position of an individua
professional raising a concern.
6. Module 2:
7. 4. As stated in the revised 11th edition, the Standards of Professional
Conduct:
A. require supervisors to focus on the detection and prevention of violations.
B. adopt separate ethical considerations for programs such as CIPM and
Investment Foundations.
C. address the risks and limitations of recommendations being made to
clients.
6. Which of the following statements best describes an aspect of the Stan-
dards of Professional Conduct? Members and candidates are required to:
A. ensure any portfolio mandate followed is fair, accurate, and complete.
B. promptly disclose changes that might materially affect investment process-
es.
C. have a reasonable and adequate basis for decisions about client confiden-
tiality.
7. Which of the following responses most completely represents an ethical
principle of CFA Institute as outlined in the Standards of Practice Handbook?
A. Individual professionalism B. Responsibilities to clients and employers C.
Ethics involved in investment analysis and recommendations: C. address the
risks and limitations of recommendations being made to clients.
, B. promptly disclose changes that might materially affect investment processes
A. Individual professionalism
8. 8. A CFA Institute member would violate the standard for material nonpublic
information by:
A. conducting price distortion practices.
B. inappropriately causing others to act.
C. inadequately maintaining investment records.
11. The Duties to Employers standard states that members and candidates
must not:
A. accept any gifts that might compromise their independence and objectivity.
B. deprive their employer of their skills and abilities as related to their employ-
ment.
C. accept compensation competing with their employer's interest and with the
written consent of all parties involved.
12. The Investment Analysis, Recommendations, and Actions standard states
that members and candidates must:
A. find an investment suitable for their client before making a recommenda-
tion.
B. make reasonable efforts to ensure that performance presentation is fair,
accurate, and complete.
C. distinguish between fact and opinion in the presentation of investment
analysis and recommendations.
13. Based on the Conflicts of Interest standard, members and candidates
must:
A. disclose, as required by law, those conflicts interfering with their profes-
sional duties.
B. disclose, as appropriate, any benefit paid to others for the recommendation
of products.
