Question #1 of 180 Question ID: 1417755
Which of the following statements about the CFA Institute's Professional Conduct
Program (PCP) is least accurate?
Possible sanctions include condemnation by a member’s peers or suspension of a
A)
candidate’s participation in the CFA Program.
If the PCP staff determine that a sanction against a member is warranted, the
B) member must either accept the sanction or lose the right to use the CFA
designation.
Members who cooperate with a PCP inquiry by providing confidential client
C) information to PCP staff are not in violation of Standard III(E) Preservation of
Confidentiality.
Question #2 of 180 Question ID: 1417771
Robert Miguel, CFA, is a portfolio manager. On Saturday, one of his clients invited
Miguel and his wife to be his guests at his luxury suite for a major league baseball
playoff game, which they did. Miguel told his supervisor on Monday that they had
attended the game with the client and that the suite was luxurious. Miguel has:
A) not violated the Standards.
B) violated the Standards because disclosure must be in writing.
C) violated the Standards because he must disclose the gift prior to accepting.
Question #3 of 180 Question ID: 1417772
At his golf club on Saturday morning, Paul Corwin, CFA, sees Frank Roberts, a friend
and institutional client of his, who tells him that he is planning to sell his house on the
7th fairway. While golfing that day, Corwin tells Robert Lowe, a realtor, that Roberts is
planning to sell his house and may need a realtor. He also tells Lowe that he manages
an equities account for Roberts. If Corwin has not received permission from Roberts,
he has violated the Standard on preservation of confidentiality:
,A) both by disclosing Roberts’ plan to sell his home and that he is a client.
by disclosing Roberts’ plan to sell his home but not by mentioning that he was a
B)
client.
by disclosing that Roberts is a client of his but not by mentioning Roberts’ plan to
C)
sell his home.
Question #4 of 180 Question ID: 1417773
Doug Watson, CFA, serves in a sales position at Sommerset Brokerage, a registered
investment adviser. Watson frequently drinks excessively. On one occasion, Watson
was cited by local police for misdemeanor public intoxication. According to the
Standard on knowledge of the law and the Standard on misconduct, Watson is in
violation of:
A) both of these Standards.
B) neither of these Standards.
C) only one of these Standards.
Question #5 of 180 Question ID: 1417774
Peter Taylor, a CFA charterholder and a food industry analyst for a large investment
firm, has been invited by Sweet Pineapple Co. to visit the firm's processing plants in
Hawaii. The Standard concerning independence and objectivity recommends that
Taylor:
A) use and pay for commercial transportation, if available.
B) obtain written permission from his employer before he accepts this invitation.
C) decline this invitation if he issues recommendations on the firm’s securities.
Question #6 of 180 Question ID: 1417775
,Ruth Brett, a Level I CFA candidate, feels nervous and unprepared the night before
the exam. Brett writes a few key notes on the bottom of her shoe. At the exam, Brett
sees the large number of proctors present and decides not to risk getting caught and
does not look at her shoe. According to the CFA Institute Code of Ethics and Standards
of Professional Conduct, Brett is:
not in violation of any Standard or the Code of Ethics because she did not use the
A)
notes.
in violation of the Code of Ethics for bringing the notes into the examination room
B)
but is not in violation of any Standard because she did not use the notes.
in violation of both the Code of Ethics and the Standard governing conduct as
C) participants in CFA Institute programs for taking the notes into the examination
room.
Question #7 of 180 Question ID: 1417776
Which of the following is least likely included in the CFA Institute Code of Ethics?
Members of CFA Institute must:
A) place their clients’ interests before their employer’s interests.
B) strive to maintain and improve the competence of others in the profession.
C) use reasonable care and exercise independent professional judgment.
Question #8 of 180 Question ID: 1417777
In formulating her report on GammaCorp's common stock, Barb Kramer, CFA, did a
complex series of statistical tests on the company's past sales and earnings. Based on
this statistical study, Kramer stated in her report that, "GammaCorp's earnings growth
for the next five years will average 15% per year." Her conclusion was based in part on
a regression analysis with a high level of statistical significance. Has Kramer violated
the Standard on communication with clients and prospective clients?
A) Yes, because she didn’t give complete details of the statistical model used.
B) Yes, because she failed to indicate that 15% growth is an estimate.
, No, because her projections are within the generally accepted bounds of statistical
C)
accuracy.
Question #9 of 180 Question ID: 1417778
Dudley Thompson is a bond salesman for a small broker/dealer in London. His firm is
the lead underwriter on a new junk bond issue for Ibex Corporation, and Thompson
has sent details of the offering to clients. Thompson calls only his accounts over
£1,000,000 for whom he thinks the issue is suitable. Thompson also posts his firm's
optimistic projections for Ibex's performance in several Internet chat rooms.
According to the Standards concerning market manipulation and fair dealing,
Thompson is in violation of:
A) both of these Standards.
B) neither of these Standards.
C) only one of these Standards.
Question #10 of 180 Question ID: 1417779
Rob Elliott, CFA, is an analyst with a large asset management firm. His personal
portfolio includes a large amount of common stock of Tech Inc., a semiconductor
company, which his firm does not currently follow. The director of the research
department has asked Elliott to analyze Tech and write a report about its investment
potential. Based on the CFA Institute Standards of Professional Conduct, the most
appropriate course of action for Elliot is to:
A) decline to write the report.
B) sell his shares of Tech before completing the report.
C) disclose the ownership of the stock to his employer and in the report, if he writes it.
Question #11 of 180 Question ID: 1417780
Which of the following statements about the CFA Institute's Professional Conduct
Program (PCP) is least accurate?
Possible sanctions include condemnation by a member’s peers or suspension of a
A)
candidate’s participation in the CFA Program.
If the PCP staff determine that a sanction against a member is warranted, the
B) member must either accept the sanction or lose the right to use the CFA
designation.
Members who cooperate with a PCP inquiry by providing confidential client
C) information to PCP staff are not in violation of Standard III(E) Preservation of
Confidentiality.
Question #2 of 180 Question ID: 1417771
Robert Miguel, CFA, is a portfolio manager. On Saturday, one of his clients invited
Miguel and his wife to be his guests at his luxury suite for a major league baseball
playoff game, which they did. Miguel told his supervisor on Monday that they had
attended the game with the client and that the suite was luxurious. Miguel has:
A) not violated the Standards.
B) violated the Standards because disclosure must be in writing.
C) violated the Standards because he must disclose the gift prior to accepting.
Question #3 of 180 Question ID: 1417772
At his golf club on Saturday morning, Paul Corwin, CFA, sees Frank Roberts, a friend
and institutional client of his, who tells him that he is planning to sell his house on the
7th fairway. While golfing that day, Corwin tells Robert Lowe, a realtor, that Roberts is
planning to sell his house and may need a realtor. He also tells Lowe that he manages
an equities account for Roberts. If Corwin has not received permission from Roberts,
he has violated the Standard on preservation of confidentiality:
,A) both by disclosing Roberts’ plan to sell his home and that he is a client.
by disclosing Roberts’ plan to sell his home but not by mentioning that he was a
B)
client.
by disclosing that Roberts is a client of his but not by mentioning Roberts’ plan to
C)
sell his home.
Question #4 of 180 Question ID: 1417773
Doug Watson, CFA, serves in a sales position at Sommerset Brokerage, a registered
investment adviser. Watson frequently drinks excessively. On one occasion, Watson
was cited by local police for misdemeanor public intoxication. According to the
Standard on knowledge of the law and the Standard on misconduct, Watson is in
violation of:
A) both of these Standards.
B) neither of these Standards.
C) only one of these Standards.
Question #5 of 180 Question ID: 1417774
Peter Taylor, a CFA charterholder and a food industry analyst for a large investment
firm, has been invited by Sweet Pineapple Co. to visit the firm's processing plants in
Hawaii. The Standard concerning independence and objectivity recommends that
Taylor:
A) use and pay for commercial transportation, if available.
B) obtain written permission from his employer before he accepts this invitation.
C) decline this invitation if he issues recommendations on the firm’s securities.
Question #6 of 180 Question ID: 1417775
,Ruth Brett, a Level I CFA candidate, feels nervous and unprepared the night before
the exam. Brett writes a few key notes on the bottom of her shoe. At the exam, Brett
sees the large number of proctors present and decides not to risk getting caught and
does not look at her shoe. According to the CFA Institute Code of Ethics and Standards
of Professional Conduct, Brett is:
not in violation of any Standard or the Code of Ethics because she did not use the
A)
notes.
in violation of the Code of Ethics for bringing the notes into the examination room
B)
but is not in violation of any Standard because she did not use the notes.
in violation of both the Code of Ethics and the Standard governing conduct as
C) participants in CFA Institute programs for taking the notes into the examination
room.
Question #7 of 180 Question ID: 1417776
Which of the following is least likely included in the CFA Institute Code of Ethics?
Members of CFA Institute must:
A) place their clients’ interests before their employer’s interests.
B) strive to maintain and improve the competence of others in the profession.
C) use reasonable care and exercise independent professional judgment.
Question #8 of 180 Question ID: 1417777
In formulating her report on GammaCorp's common stock, Barb Kramer, CFA, did a
complex series of statistical tests on the company's past sales and earnings. Based on
this statistical study, Kramer stated in her report that, "GammaCorp's earnings growth
for the next five years will average 15% per year." Her conclusion was based in part on
a regression analysis with a high level of statistical significance. Has Kramer violated
the Standard on communication with clients and prospective clients?
A) Yes, because she didn’t give complete details of the statistical model used.
B) Yes, because she failed to indicate that 15% growth is an estimate.
, No, because her projections are within the generally accepted bounds of statistical
C)
accuracy.
Question #9 of 180 Question ID: 1417778
Dudley Thompson is a bond salesman for a small broker/dealer in London. His firm is
the lead underwriter on a new junk bond issue for Ibex Corporation, and Thompson
has sent details of the offering to clients. Thompson calls only his accounts over
£1,000,000 for whom he thinks the issue is suitable. Thompson also posts his firm's
optimistic projections for Ibex's performance in several Internet chat rooms.
According to the Standards concerning market manipulation and fair dealing,
Thompson is in violation of:
A) both of these Standards.
B) neither of these Standards.
C) only one of these Standards.
Question #10 of 180 Question ID: 1417779
Rob Elliott, CFA, is an analyst with a large asset management firm. His personal
portfolio includes a large amount of common stock of Tech Inc., a semiconductor
company, which his firm does not currently follow. The director of the research
department has asked Elliott to analyze Tech and write a report about its investment
potential. Based on the CFA Institute Standards of Professional Conduct, the most
appropriate course of action for Elliot is to:
A) decline to write the report.
B) sell his shares of Tech before completing the report.
C) disclose the ownership of the stock to his employer and in the report, if he writes it.
Question #11 of 180 Question ID: 1417780
