CFA LEVEL 1 - ETHICS, PROFESSIONAL
STANDARDS, AND GIPS QUESTIONS
AND ANSWERS WITH SOLUTIONS 2024
Stakeholders - ANSWER Individuals or groups of individuals who could be affected either directly or
indirectly by a decision (Have a stake in decision)
Ethics - ANSWER A set of moral principles and rules of conduct that provide guidance for our behavior
Moral/ethical principles - ANSWER Beliefs about what is good, acceptable, obligatory, and what is bad,
unacceptable, or forbidden
Do moral/ethical principles pertain to yourself or others? - ANSWER Both
Code of ethics - ANSWER -Written principles
-Groups codification of beliefs about obligatory and forbidden conduct
Standards of conduct - ANSWER Benchmarks for minimally acceptable behavior- clarifies code of ethics
Profession - ANSWER Specialized skills and knowledge who serve others and agree to behave in
accordance w/ a code of ethics
What do most professions emphasize? - ANSWER -Ethical approach
-Importance of good service
-Empathy with the client
What separates professions from tradespeople? - ANSWER -Licensed status and technical standards
-Serve society
How do professions establish trust? - ANSWER 1. Normalize practitioner behavior
,2. Provide a service to society
3. Client focused
4. High entry standards
5. Possess body of expert knowledge
6. Encourage and facilitate continuing education
7. Monitor professional conduct
8 Collegial
9. Recognized oversight bodies
10. Encourage engagement of members
Fiduciary duty/standard - ANSWER Obligation to deliver high standard of care when acting for the
benefit of another party
What is practice analysis? - ANSWER Updating Global Body of Investment Knowledge (GBIK) and
Candidate Body of Knowledge (CBOK)
Situational influences - ANSWER External factors that shape our thinking, decision making, and behavior
What is most likely to make people act unethically? - ANSWER External factors, environmental or cultural
elements
What is the ethical decision making framework? - ANSWER 1. Identify (facts, stakeholders, duties,
conflicts, etc)
2. Consider (influences, actions, guidance)
3. Reflect (was the outcome anticipated)?
Standards of Practice Handbook (Handbook) - ANSWER Provides guidance to people who grapple with
real ethical dilemmas in investment profession
What does The Handbook address? - ANSWER Professional intersection where theory meets practice.
Ethics crosses from abstract to concrete.
, Who is The Handbook intended for? - ANSWER -Global audience
-CFA institute members
-Supervisors and direct/indirect reports determining responsibilities to each other, client, and market
-CFA institute candidates
What does The Handbook connect? - ANSWER Code of Ethics and Standards of Professional Conduct
What is strongly encouraged of members by The Handbook? - ANSWER Discuss w/ supervisors, legal,
and compliance departments the content of the Code and the Standards and the members' general
obligations under such
What changed in the 11th edition of The Handbook? - ANSWER 1. Mission (betterment of society)
2. Capital markets principle (betterment of society)
3. Responsibilities of Supervisors (increased compliance expectations)
4. Communicate w/ clients and prospects (implicit requirement to discuss risks and limitations)
(disclosures change)
5. CIPM Program/CFA Investment Foundations certificate (expands to "participants")
What is the Disciplinary Review Commitee (DRC)? - ANSWER -Responsible for enforcement of the Code
and Standards
-Volunteers, all CFA charterholders
-Reviews decisions of Professional Conduct staff if member/candidate disagrees
What is the Certificate of Investment Performance Measurement (CIPM)? - ANSWER
What is the statement regarding compliancew ith CFA Program for nonmembers and firms? - ANSWER
[Name of party] claims compliance with the CFA Institute Code of Ethics and Standards of Professional
Conduct. This claim has not been verified by CFA institute.
STANDARDS, AND GIPS QUESTIONS
AND ANSWERS WITH SOLUTIONS 2024
Stakeholders - ANSWER Individuals or groups of individuals who could be affected either directly or
indirectly by a decision (Have a stake in decision)
Ethics - ANSWER A set of moral principles and rules of conduct that provide guidance for our behavior
Moral/ethical principles - ANSWER Beliefs about what is good, acceptable, obligatory, and what is bad,
unacceptable, or forbidden
Do moral/ethical principles pertain to yourself or others? - ANSWER Both
Code of ethics - ANSWER -Written principles
-Groups codification of beliefs about obligatory and forbidden conduct
Standards of conduct - ANSWER Benchmarks for minimally acceptable behavior- clarifies code of ethics
Profession - ANSWER Specialized skills and knowledge who serve others and agree to behave in
accordance w/ a code of ethics
What do most professions emphasize? - ANSWER -Ethical approach
-Importance of good service
-Empathy with the client
What separates professions from tradespeople? - ANSWER -Licensed status and technical standards
-Serve society
How do professions establish trust? - ANSWER 1. Normalize practitioner behavior
,2. Provide a service to society
3. Client focused
4. High entry standards
5. Possess body of expert knowledge
6. Encourage and facilitate continuing education
7. Monitor professional conduct
8 Collegial
9. Recognized oversight bodies
10. Encourage engagement of members
Fiduciary duty/standard - ANSWER Obligation to deliver high standard of care when acting for the
benefit of another party
What is practice analysis? - ANSWER Updating Global Body of Investment Knowledge (GBIK) and
Candidate Body of Knowledge (CBOK)
Situational influences - ANSWER External factors that shape our thinking, decision making, and behavior
What is most likely to make people act unethically? - ANSWER External factors, environmental or cultural
elements
What is the ethical decision making framework? - ANSWER 1. Identify (facts, stakeholders, duties,
conflicts, etc)
2. Consider (influences, actions, guidance)
3. Reflect (was the outcome anticipated)?
Standards of Practice Handbook (Handbook) - ANSWER Provides guidance to people who grapple with
real ethical dilemmas in investment profession
What does The Handbook address? - ANSWER Professional intersection where theory meets practice.
Ethics crosses from abstract to concrete.
, Who is The Handbook intended for? - ANSWER -Global audience
-CFA institute members
-Supervisors and direct/indirect reports determining responsibilities to each other, client, and market
-CFA institute candidates
What does The Handbook connect? - ANSWER Code of Ethics and Standards of Professional Conduct
What is strongly encouraged of members by The Handbook? - ANSWER Discuss w/ supervisors, legal,
and compliance departments the content of the Code and the Standards and the members' general
obligations under such
What changed in the 11th edition of The Handbook? - ANSWER 1. Mission (betterment of society)
2. Capital markets principle (betterment of society)
3. Responsibilities of Supervisors (increased compliance expectations)
4. Communicate w/ clients and prospects (implicit requirement to discuss risks and limitations)
(disclosures change)
5. CIPM Program/CFA Investment Foundations certificate (expands to "participants")
What is the Disciplinary Review Commitee (DRC)? - ANSWER -Responsible for enforcement of the Code
and Standards
-Volunteers, all CFA charterholders
-Reviews decisions of Professional Conduct staff if member/candidate disagrees
What is the Certificate of Investment Performance Measurement (CIPM)? - ANSWER
What is the statement regarding compliancew ith CFA Program for nonmembers and firms? - ANSWER
[Name of party] claims compliance with the CFA Institute Code of Ethics and Standards of Professional
Conduct. This claim has not been verified by CFA institute.
