CFA Exam 1 & 2 Questions And Answers
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Proprietary trading is most likely carried out by:
dealers.
brokers.
settlement agents. - ANSWER✔✔dealers
Globalisation in the investment industry is associated with the growing tendency of
investors:
to look outside their local market for investment opportunities.
to prefer to hedge the risks of foreign investment, such as currency risk.
in smaller countries to compete more effectively with those in larger countries. -
ANSWER✔✔to look outside their local market for investment opportunities.
The goal of all economic systems is to:
efficiently allocate scarce resources to their most productive uses.
produce enough goods and services to satisfy the desires of all consumers.
support government spending on public services, such as education, defense, and
infrastructure. - ANSWER✔✔efficiently allocate scarce resources to their most
productive uses.
An individual who helps buyers and sellers find and trade with one another is a(n):
,broker.
dealer.
auditor. - ANSWER✔✔broker
Securities regulations are created by:
legislative bodies.
individual investors.
government agencies. - ANSWER✔✔government agencies.
The CFA Institute Code of Ethics requires members to:
protect clients' interests at all times and in all situations.
encourage competitors to increase their levels of competence.
ensure investment recommendations are similar across an industry. -
ANSWER✔✔encourage competitors to increase their levels of competence.
An employee is assigned a complicated task by her supervisor but believes she
does not have the technical skills to carry it out. The employee should:
refuse to carry out the assignment.
carry out the work as best as she can.
get a co-worker to do it and take credit for the work. - ANSWER✔✔refuse to carry
out the assignment.
,Investment advisers have an ethical obligation to:
protect their own interests.
exercise independent judgment.
sell products with the highest fees. - ANSWER✔✔exercise independent judgment.
Based on the CFA Institute Standards of Practice, investment advisers should
manage a client's investment portfolio the same way they would manage:
their own assets.
other client accounts.
the account if managed by a competitor. - ANSWER✔✔Based on the CFA
Institute Standards of Practice, investment advisers should manage a client's
investment portfolio the same way they would manage:
their own assets.
other client accounts.
the account if managed by a competitor.
During a job interview, a potential employer described the CFA Institute Code of
Ethics as "a set of principles establishing rules governing ethical behavior required
of investment professionals toward their clients and employers". Does this
description fully capture the Code of Ethics' requirement to act in an ethical
manner?
Yes
No, the Code of Ethics also requires ethical behavior when dealing with potential
clients
, No, the Code of Ethics also requires ethical interaction with all capital market
participants - ANSWER✔✔No, the Code of Ethics also requires ethical interaction
with all capital market participants
Regulators often seek public consultation prior to the implementation of new
regulations in order to:
educate consumers and service providers on the new rules.
improve the final rules by undertaking a cost-benefit analysis.
ensure that the new rules are favorable to those likely to be affected. -
ANSWER✔✔improve the final rules by undertaking a cost-benefit analysis.
Regulations prohibiting front running are types of:
trading rules.
operational rules.
sales practice rules. - ANSWER✔✔trading rules.
Regulators help capital markets do all of the following except:
reduce investment risk.
allocate capital to productive use.
ensure investors are treated equally. - ANSWER✔✔ensure investors are treated
equally.
Net capital rules are put in place to prevent all of the following except:
With Verified Solutions 100% Correct
Rated A+
Proprietary trading is most likely carried out by:
dealers.
brokers.
settlement agents. - ANSWER✔✔dealers
Globalisation in the investment industry is associated with the growing tendency of
investors:
to look outside their local market for investment opportunities.
to prefer to hedge the risks of foreign investment, such as currency risk.
in smaller countries to compete more effectively with those in larger countries. -
ANSWER✔✔to look outside their local market for investment opportunities.
The goal of all economic systems is to:
efficiently allocate scarce resources to their most productive uses.
produce enough goods and services to satisfy the desires of all consumers.
support government spending on public services, such as education, defense, and
infrastructure. - ANSWER✔✔efficiently allocate scarce resources to their most
productive uses.
An individual who helps buyers and sellers find and trade with one another is a(n):
,broker.
dealer.
auditor. - ANSWER✔✔broker
Securities regulations are created by:
legislative bodies.
individual investors.
government agencies. - ANSWER✔✔government agencies.
The CFA Institute Code of Ethics requires members to:
protect clients' interests at all times and in all situations.
encourage competitors to increase their levels of competence.
ensure investment recommendations are similar across an industry. -
ANSWER✔✔encourage competitors to increase their levels of competence.
An employee is assigned a complicated task by her supervisor but believes she
does not have the technical skills to carry it out. The employee should:
refuse to carry out the assignment.
carry out the work as best as she can.
get a co-worker to do it and take credit for the work. - ANSWER✔✔refuse to carry
out the assignment.
,Investment advisers have an ethical obligation to:
protect their own interests.
exercise independent judgment.
sell products with the highest fees. - ANSWER✔✔exercise independent judgment.
Based on the CFA Institute Standards of Practice, investment advisers should
manage a client's investment portfolio the same way they would manage:
their own assets.
other client accounts.
the account if managed by a competitor. - ANSWER✔✔Based on the CFA
Institute Standards of Practice, investment advisers should manage a client's
investment portfolio the same way they would manage:
their own assets.
other client accounts.
the account if managed by a competitor.
During a job interview, a potential employer described the CFA Institute Code of
Ethics as "a set of principles establishing rules governing ethical behavior required
of investment professionals toward their clients and employers". Does this
description fully capture the Code of Ethics' requirement to act in an ethical
manner?
Yes
No, the Code of Ethics also requires ethical behavior when dealing with potential
clients
, No, the Code of Ethics also requires ethical interaction with all capital market
participants - ANSWER✔✔No, the Code of Ethics also requires ethical interaction
with all capital market participants
Regulators often seek public consultation prior to the implementation of new
regulations in order to:
educate consumers and service providers on the new rules.
improve the final rules by undertaking a cost-benefit analysis.
ensure that the new rules are favorable to those likely to be affected. -
ANSWER✔✔improve the final rules by undertaking a cost-benefit analysis.
Regulations prohibiting front running are types of:
trading rules.
operational rules.
sales practice rules. - ANSWER✔✔trading rules.
Regulators help capital markets do all of the following except:
reduce investment risk.
allocate capital to productive use.
ensure investors are treated equally. - ANSWER✔✔ensure investors are treated
equally.
Net capital rules are put in place to prevent all of the following except:
