CFA Level 1 Exam - Code and Standards
& GIPS Test || With 100% Accurate
Solutions
Jim Wonder reads a study in a financial Journal regarding the valuation of global equity
markets, and wishes to use information in the study in his own research. In order to
avoid violating Standard I(C): Misrepresentation Wonder should attribute the information
used in his report to
a. The financial journal
b. The original author of the study
c. Both the financial journal and the original author of the study - ANSWER-c.
Which of the following policies most closely adheres to the recommended procedures
for compliance under Standard I(B):Independence and Objectivity regarding gifts?
a. Analysts should reject all gifts from clients and related parties
b. Analysts should disclose gifts from clients to their employer and receive only modest
gifts from related parties
c. Analysts should disclose gifts from clients to their employer and reject all gifts from
related parties - ANSWER-b.
Frank Clotti is an investment analyst working for a credit rating agency. Clotti has been
told by his immediate supervisor that ratings for structured products issued by a certain
client should not receive a rating that is below investment grade, as it might affect the
advisory relationship that the credit rating agency has with the client. Clotti has already
conducted his analysis and concluded that several of the structured products issued by
the client should be rated as below investment grade. According to the Standards, Clotti
should:
a. Adhere to the instructions of his supervisor
b. Assign the structured products the lowest possible investment grade
c. Refuse to associate with research that assigns a rating of investment grade to the
structured products he has concluded should be rated below investment grade -
ANSWER-c.
Tom Cobo is a research analyst covering the biotechnology sector. He employs an
'expert network' of industry contacts to stay abreast of current issues in the industry.
Cobo arranges a call with a scientist involved in the preliminary testing of an Alzheimer's
disease, during which the scientist discloses that it is very likely that the tests will be
successful and the drug will be fast tracked through the government approval system.
Cobo returns to his firm and discusses this information with his colleagues, before
increasing his holding in the company. Cobo has
a. Violated Standard II(A): Material Non‐Public Information
, b. Not violated Standard II(A): Material Non‐Public Information so long as procedures
are in place with the expert network to deter the exchange of material non‐public
information
c. Not violated Standard II(A): Material Non‐Public Information because the information
was being publically disseminate - ANSWER-a.
Oversight and responsibility for the CFA Institute Professional Conduct Program is
maintained by the: - ANSWER-Board of Governors
Who enforces the Code and Standards? - ANSWER-The Disciplinary Review
Committee (DRC)
Sanctions that can be imposed by the CFA institutes include the following except: public
censure, Fine, Suspension of membership - ANSWER-Fine
Statement 1:"Members of CFA Institute and candidates for the CFA designation must
promote the integrity of and uphold the rules governing capital markets"
Statement 2:" Integrity of Capital Markets: Market Manipulation."
which is Code of Ethics and which is Standard of Professional Conduct? - ANSWER-
Statement 1 as a component of the Code of Ethics
Statement 2 as a Standard of Professional Conduct
All of the following are considered acts of plagiarism under Standard I(C):
Misrepresentation except:
a. Verbally repeating a quote of a leading industry expert in an online webcast without
attribution
b. A firm using work completed by analysts that subsequently left the firm without
attributing the analysts
c. An analyst reissuing work solely under their name that was initially completed by
analysts that previously worked at the firm - ANSWER-answer: B
Standard I(C): Misrepresentation, applies to verbal statements and those made on
internet platforms. Work completed by employees is the property of the firm and the firm
retains the right to continue using the work completed after a member or candidate has
left the organization. The firm may issue future reports without providing attribution to
the prior analysts. A member or candidate cannot, however, reissue a previously
released report solely under his or her name.
Charles Baker uses internet social media platforms to communicate with clients. He
resides in a country with no securities laws or regulations that address social media,
and his clients are located in a country with less strict securities laws and regulations
regarding use of social media than the Code and Standards. Baker should adhere to:
a. the Code and Standards
b. the securities laws and regulations of the location of his client
& GIPS Test || With 100% Accurate
Solutions
Jim Wonder reads a study in a financial Journal regarding the valuation of global equity
markets, and wishes to use information in the study in his own research. In order to
avoid violating Standard I(C): Misrepresentation Wonder should attribute the information
used in his report to
a. The financial journal
b. The original author of the study
c. Both the financial journal and the original author of the study - ANSWER-c.
Which of the following policies most closely adheres to the recommended procedures
for compliance under Standard I(B):Independence and Objectivity regarding gifts?
a. Analysts should reject all gifts from clients and related parties
b. Analysts should disclose gifts from clients to their employer and receive only modest
gifts from related parties
c. Analysts should disclose gifts from clients to their employer and reject all gifts from
related parties - ANSWER-b.
Frank Clotti is an investment analyst working for a credit rating agency. Clotti has been
told by his immediate supervisor that ratings for structured products issued by a certain
client should not receive a rating that is below investment grade, as it might affect the
advisory relationship that the credit rating agency has with the client. Clotti has already
conducted his analysis and concluded that several of the structured products issued by
the client should be rated as below investment grade. According to the Standards, Clotti
should:
a. Adhere to the instructions of his supervisor
b. Assign the structured products the lowest possible investment grade
c. Refuse to associate with research that assigns a rating of investment grade to the
structured products he has concluded should be rated below investment grade -
ANSWER-c.
Tom Cobo is a research analyst covering the biotechnology sector. He employs an
'expert network' of industry contacts to stay abreast of current issues in the industry.
Cobo arranges a call with a scientist involved in the preliminary testing of an Alzheimer's
disease, during which the scientist discloses that it is very likely that the tests will be
successful and the drug will be fast tracked through the government approval system.
Cobo returns to his firm and discusses this information with his colleagues, before
increasing his holding in the company. Cobo has
a. Violated Standard II(A): Material Non‐Public Information
, b. Not violated Standard II(A): Material Non‐Public Information so long as procedures
are in place with the expert network to deter the exchange of material non‐public
information
c. Not violated Standard II(A): Material Non‐Public Information because the information
was being publically disseminate - ANSWER-a.
Oversight and responsibility for the CFA Institute Professional Conduct Program is
maintained by the: - ANSWER-Board of Governors
Who enforces the Code and Standards? - ANSWER-The Disciplinary Review
Committee (DRC)
Sanctions that can be imposed by the CFA institutes include the following except: public
censure, Fine, Suspension of membership - ANSWER-Fine
Statement 1:"Members of CFA Institute and candidates for the CFA designation must
promote the integrity of and uphold the rules governing capital markets"
Statement 2:" Integrity of Capital Markets: Market Manipulation."
which is Code of Ethics and which is Standard of Professional Conduct? - ANSWER-
Statement 1 as a component of the Code of Ethics
Statement 2 as a Standard of Professional Conduct
All of the following are considered acts of plagiarism under Standard I(C):
Misrepresentation except:
a. Verbally repeating a quote of a leading industry expert in an online webcast without
attribution
b. A firm using work completed by analysts that subsequently left the firm without
attributing the analysts
c. An analyst reissuing work solely under their name that was initially completed by
analysts that previously worked at the firm - ANSWER-answer: B
Standard I(C): Misrepresentation, applies to verbal statements and those made on
internet platforms. Work completed by employees is the property of the firm and the firm
retains the right to continue using the work completed after a member or candidate has
left the organization. The firm may issue future reports without providing attribution to
the prior analysts. A member or candidate cannot, however, reissue a previously
released report solely under his or her name.
Charles Baker uses internet social media platforms to communicate with clients. He
resides in a country with no securities laws or regulations that address social media,
and his clients are located in a country with less strict securities laws and regulations
regarding use of social media than the Code and Standards. Baker should adhere to:
a. the Code and Standards
b. the securities laws and regulations of the location of his client
