Chartered Financial Analyst (CFA)
Level 3 Exam Test Bank with All 350
Questions, Exams of Finance
Which of the following statements is most accurate? Ethics can be described as:
a) a commitment to upholding the law.
b) an individual's personal opinion about right and wrong.
c) a set of moral principles that provide guidance for our behavior. - ANSWER-c)
Which of the following statements is most accurate? Standards of conduct:
a) are a necessary component of any code of ethics.
b) serve as a general guide regarding proper conduct by members of a group.
c) serve as benchmarks for the minimally acceptable behavior required of members of a group. -
ANSWER-c)
Which of the following statements best describes how professionals use their specialized knowledge
and skills? Professionals use their specialized knowledge and skills:
- in service to others.
- to advance their career.
- for the exclusive benefit of their employers. - ANSWER-a)
Which of the following statements is most accurate? A profession's code of ethics:
-includes standards of conduct or specific benchmarks for behavior.
- ensures that all members of a profession will act ethically at all times.
- publicly communicates the shared principles and expected behaviors of a profession's members. -
ANSWER-c)
Which of the following will most likely determine whether an individual will behave unethically?
- The person's character
- The person's internal traits and intrinsic motivation
- External factors, such as environmental or cultural elements - ANSWER-c
Which of the following statements is most accurate?
- Large financial rewards, such as bonuses, are the most powerful situational influences.
,- When decision making focuses on short-term factors, the likelihood of ethical conduct increases.
- Situational influences can motivate individuals to act in their short-term self-interests without
recognizing the long-term risks or consequences for themselves and others. - ANSWER-c)
Which of the following statements is most accurate? Investment professionals have a special
responsibility to act ethically because:
- the industry is heavily regulated.
- they are entrusted to protect clients' assets.
- the profession requires compliance with its code of ethics. - ANSWER-b
Which of the following statements is most accurate?
- All legal behavior is ethical behavior.
- Some ethical behavior may be illegal.
- Legal standards represent the highest standard. - ANSWER-b)
Which of the following statements is most accurate?
- Increased regulations are the most useful means to reduce unethical behavior by market
participants.
- Regulators quickly design and implement laws and regulations to address practices that adversely
affect the fairness and efficiency of markets.
- New laws designed to reduce or eliminate conduct that adversely affects the markets can create
opportunities for different, but similarly problematic, conduct. - ANSWER-c)
Which of the following statements is most accurate? An ethical decision-making framework:
- is only beneficial when a firm lacks a code of ethics.
- is used to improve compliance with laws and regulations.
- is a tool for analyzing the potential alternative actions and consequences of a decision. - ANSWER-c
Which of the following is most accurate? Ethical decision-making frameworks:
- raise awareness of different perspectives.
- focus attention on short-term consequences.
- allocate more weight to those who will directly benefit from the decision. - ANSWER-a
Which of the following is most accurate? Ethical decision-making frameworks:
- are not needed if behavior is legal.
- identify who gains the most from a decision.
- can help reduce unanticipated ethical lapses and unexpected consequences. - ANSWER-c
, Benchmarks for minimally acceptable behaviors of community members are:
a code of ethics.
laws and regulations.
standards of conduct. - ANSWER-a
Specialized knowledge and skills, a commitment to serve others, and a shared code of ethics best
characterize a(n):
vocation.
profession.
occupation. - ANSWER-b
Which of the following best identifies an internal trait that may lead to poor ethical decision making?
Overconfidence
Loyalty to employer
Promise of money or prestige - ANSWER-a
Situational influences in decision making will most likely be minimized if:
strong compliance programs are in place.
longer-term consequences are considered.
individuals believe they are truthful and honest. - ANSWER-b
Decision makers who use a compliance approach are most likely to:
avoid situational influences.
oversimplify decision making.
consider more factors than when using an ethical decision-making approach. - ANSWER-b
When unethical behavior erodes trust in an investment firm, that firm is more likely to experience:
lower revenues only.
higher expenses only.
lower revenues and higher expenses. - ANSWER-c
Which is an example of an activity that may be legal but that CFA Institute considers unethical?
Making legally required disclosures in marketing materials
Trading while in possession of material nonpublic information
Disclosure by an employee of his or her own company's dishonest activity - ANSWER-b
Level 3 Exam Test Bank with All 350
Questions, Exams of Finance
Which of the following statements is most accurate? Ethics can be described as:
a) a commitment to upholding the law.
b) an individual's personal opinion about right and wrong.
c) a set of moral principles that provide guidance for our behavior. - ANSWER-c)
Which of the following statements is most accurate? Standards of conduct:
a) are a necessary component of any code of ethics.
b) serve as a general guide regarding proper conduct by members of a group.
c) serve as benchmarks for the minimally acceptable behavior required of members of a group. -
ANSWER-c)
Which of the following statements best describes how professionals use their specialized knowledge
and skills? Professionals use their specialized knowledge and skills:
- in service to others.
- to advance their career.
- for the exclusive benefit of their employers. - ANSWER-a)
Which of the following statements is most accurate? A profession's code of ethics:
-includes standards of conduct or specific benchmarks for behavior.
- ensures that all members of a profession will act ethically at all times.
- publicly communicates the shared principles and expected behaviors of a profession's members. -
ANSWER-c)
Which of the following will most likely determine whether an individual will behave unethically?
- The person's character
- The person's internal traits and intrinsic motivation
- External factors, such as environmental or cultural elements - ANSWER-c
Which of the following statements is most accurate?
- Large financial rewards, such as bonuses, are the most powerful situational influences.
,- When decision making focuses on short-term factors, the likelihood of ethical conduct increases.
- Situational influences can motivate individuals to act in their short-term self-interests without
recognizing the long-term risks or consequences for themselves and others. - ANSWER-c)
Which of the following statements is most accurate? Investment professionals have a special
responsibility to act ethically because:
- the industry is heavily regulated.
- they are entrusted to protect clients' assets.
- the profession requires compliance with its code of ethics. - ANSWER-b
Which of the following statements is most accurate?
- All legal behavior is ethical behavior.
- Some ethical behavior may be illegal.
- Legal standards represent the highest standard. - ANSWER-b)
Which of the following statements is most accurate?
- Increased regulations are the most useful means to reduce unethical behavior by market
participants.
- Regulators quickly design and implement laws and regulations to address practices that adversely
affect the fairness and efficiency of markets.
- New laws designed to reduce or eliminate conduct that adversely affects the markets can create
opportunities for different, but similarly problematic, conduct. - ANSWER-c)
Which of the following statements is most accurate? An ethical decision-making framework:
- is only beneficial when a firm lacks a code of ethics.
- is used to improve compliance with laws and regulations.
- is a tool for analyzing the potential alternative actions and consequences of a decision. - ANSWER-c
Which of the following is most accurate? Ethical decision-making frameworks:
- raise awareness of different perspectives.
- focus attention on short-term consequences.
- allocate more weight to those who will directly benefit from the decision. - ANSWER-a
Which of the following is most accurate? Ethical decision-making frameworks:
- are not needed if behavior is legal.
- identify who gains the most from a decision.
- can help reduce unanticipated ethical lapses and unexpected consequences. - ANSWER-c
, Benchmarks for minimally acceptable behaviors of community members are:
a code of ethics.
laws and regulations.
standards of conduct. - ANSWER-a
Specialized knowledge and skills, a commitment to serve others, and a shared code of ethics best
characterize a(n):
vocation.
profession.
occupation. - ANSWER-b
Which of the following best identifies an internal trait that may lead to poor ethical decision making?
Overconfidence
Loyalty to employer
Promise of money or prestige - ANSWER-a
Situational influences in decision making will most likely be minimized if:
strong compliance programs are in place.
longer-term consequences are considered.
individuals believe they are truthful and honest. - ANSWER-b
Decision makers who use a compliance approach are most likely to:
avoid situational influences.
oversimplify decision making.
consider more factors than when using an ethical decision-making approach. - ANSWER-b
When unethical behavior erodes trust in an investment firm, that firm is more likely to experience:
lower revenues only.
higher expenses only.
lower revenues and higher expenses. - ANSWER-c
Which is an example of an activity that may be legal but that CFA Institute considers unethical?
Making legally required disclosures in marketing materials
Trading while in possession of material nonpublic information
Disclosure by an employee of his or her own company's dishonest activity - ANSWER-b
