CFA 2018 Quest bank 01 Code of Ethics and Standards of Professional Conduct

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Test ID: 7154512

Code of Ethics and Standards of Professional Conduct

Question #1 of 23

Question ID: 412271

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Question #2 of 23

Question ID: 412266

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Question #3 of 23

Question ID: 412269

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Whichofthefollowing isacomponentoftheCodeofEthics?

Members shall not knowingly participate or assist in any violation of such laws, rules, or regulations.

Membersshallusereasonablecareandexerciseindependent professional judgment. Membersshallnotengageinany professionalconductinvolving dishonesty,fraud, deceit,or misrepresentationorcommitanyactthatreflectsadverselyontheir honesty,trustworthiness,or professionalcompetence.

Explanation

ThisisacomponentoftheCodeofEthics. Others pertaintotheStandardsofProfessionalConduct.

According totheCodeofEthics,a memberreflectscreditonthe profession whena member: places the clients first.

consults withother membersonaregularbasis. practicesina professionalandethical manner.

Explanation

ComponentfouroftheCodesaysthata membershall "Practiceandencourageothersto practiceina professionalandethical mannerthat willreflectcrediton membersandthe profession." NeitheroftheotherchoicesareimpliedbytheCode.

TheCFAInstituteCodeofEthicsspecifiesthatCFAInstituteMembersandCandidates mustdoallofthefollowing EXCEPT: use reasonable care and exercise independent professional judgment when

engaging in professional activities.

act withintegrity,competence,diligence,respect,andinanethical manner. refrainfrom anyconductthatcompromisesthereputationorintegrityoftheCFA designation.

Explanation

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Question #4 of 23

Question ID: 461158

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Question #5 of 23

Question ID: 412272

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6 of 23

Question ID: 412268

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TheCFAInstituteCodeofEthicsleastlikelyrequiresaMemberorCandidateto:

Strive to maintain and improve the competence of others in the profession. Understandandcomply withallapplicablelaws,rules,andregulations.

Practiceandencourageothersto practiceina professionalandethical mannerthat willreflectcrediton membersandtheir profession.

Explanation

Understanding andcomplying withallapplicablelaws,rules,andregulationsisrequiredbyStandardI(A) - Knowledgeofthe Law.TheotherchoicesareincludedintheCodeofEthics.

According totheCFAInstituteCodeofEthics,CFAInstitute membersshall:

preserve the confidentiality of information communicated by clients, prospects, or employers concerning investment matters.

act withintegrity,competence,diligence,respect,andinanethical manner when dealing withthe public,clients, prospectiveclients,employers,employees,colleagues intheinvestment profession,andother participantsinthe globalcapital markets. maintainknowledgeandcomply withallapplicablelaws,rulesandregulations.

Explanation

Acting withintegrity,competence,diligence,respect,andinanethical manner whendealing withthe public,clients,

prospectiveclients,employers,employees,colleaguesintheinvestment profession,andother participantsinthe globalcapital marketsisoneofthesix componentsoftheCodeofEthics, whereastheotherstatementsare partoftheStandardsof ProfessionalConduct.

According totheCodeofEthics, when practicing ina professionalandethical mannerthe goalisto: resolve conflicts between clients and employers.

reflectcrediton membersandthe profession. increase membership inCFAInstitute.

Explanation

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Question #7 of 23

Question ID:412274 Attending continuing education seminars on investing and inviting colleagues to come along.

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Question #10 of 23

Question ID:460623

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Question #11 of 23

Question ID:412280

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Question #12 of 23

Question ID:461163

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Question #13 of 23

Question ID:461161

Whichofthefollowing isleastlikelytobeareasonforimposing asuspensionona memberorcandidate? Misdemeanor charge for possession of narcotics.

Discussing a questionfrom theCFAexamsonsocial media. Failing toreturntheannual professionalconductstatement.

Explanation

A misdemeanorchargenotrelatedto professionalconductisnot groundsforasuspension.Theotherchoicesareviolationsof theCodeandStandardsand mayresultinCFAInstituteimposing asuspensionof membership or participation.

Whichofthefollowing isacomponentoftheCodeofEthics? CFAInstitute membersshall: not knowingly participate or assist in any violation of laws, rules, or

regulations.

use particularcareindetermining applicablefiduciaryduty.

usereasonablecareandexerciseindependent professional judgment.

Explanation

Using reasonablecareandexercising independent professional judgmentisoneofthecomponentsoftheCodeofEthics, whereastheotherstatementsare partoftheStandardsofProfessionalConduct.

According totheStandardsofProfessionalConduct,investmenttransactionsforclientsandemployers musthave priorityover investmenttransactionsin whichaMemberorCandidateisthebeneficialowner.Thisconceptis mostdirectlyaddressedin:

Standard VI, Conflicts of Interest

Standard V,InvestmentAnalysis, Recommendations,andActions StandardI,Professionalism

Explanation

Standard VI(B)addresses priorityoftransactions,andstatesthat "Investmenttransactionsforclientsandemployers must have priorityoverinvestmenttransactionsin whichaMemberorCandidateisthebeneficialowner."

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Question #14 of 23

Question ID:412277

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Question #15 of 23

Question ID:477247

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Question #1

6 of 23

Question ID:412273

correct.

notcorrect,becausenosuchordering or priorityis givenintheCode. notcorrect,becausehisfirstdutyistothe public.

Explanation

Componentoneofthe Code of Ethics mentionsdutiestothe public,clients, prospects,employers,employees,andfellow members. Noordering of prioritiesis given. Standards of Professional Conduct ontheotherhand,does give priority. StandardIII.A,DutiestoClients,specifiesthatclientshave priorityoveremployers.

Whichofthefollowing is NOT partoftheCFAInstituteCodeofEthics? Contractual provisions.

Independent judgment. Competence.

Explanation

Contractual provisionsarenot partoftheCodeofEthics.

MichaelMalone,CFA,isaninvestmentanalystforalargebrokeragefirm in New York whocoverstheairlinesindustry.After hoursinhis personaltime,Malone maintainsanonlineblog on whichheexpresseshis personalopinionsaboutvarious investmentopportunities,including,butnotlimitedto,theairlinesindustry. Onhisblog,he postsaverynegativeinvestment opinionabout WestAirstock.Maloneknowsthat WestAir'sstock willbedowngradedtoa "sell" byhisfirm next week.Malone hasmostlikelyviolated:

Standard VI(B) Priority of Transactions. violatedStandardIV(A) Loyalty.

violatedStandardII(A)Material NonpublicInformation.

Explanation

Byexpressing hisinvestmentanalysisonhis personalblog aheadofhisemployer,Malonedeprivedhisemployerofthe benefitsofhisskillsandabilitiesandthereforeviolatedStandardIV(A) Loyalty.Malonedidnot possess materialnonpublic informationabout WestAirandnotransactionshavetaken place.

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Question #17 of 23

Question ID:442247

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Question #1

8 of 23

Question ID:412276

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Question #1

9 of 23

Question ID:470995

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vote all proxies on behalf of clients in a responsible manner. utilizeclientbrokeragetothesolebenefitoftheclient.

submittoclients,atleast quarterly,itemizedstatementsdetailing allofthe period's transactions.

Explanation

Becauseofthetimeandexpenseinvolvedinvoting a proxy,MembersandCandidatesarenotrequiredtovoteevery proxy.A costbenefitanalysiscanbe performedtodetermineifitisnecessarytovotea proxy.

Whichofthefollowing isacomponentoftheCodeofEthics?

Members and candidates must not engage in conduct that compromises the integrity of the CFA designation or the security of the CFA examinations. Transactionsforclientsandemployershave priorityovertransactionsin whicha memberorcandidateisthebeneficialowner.

Practiceandencourageothersto practiceina professionalandethical mannerthat willreflectcrediton membersandtheir profession.

Explanation

ThisisacomponentoftheCodeofEthics. Others pertaintotheStandardsofPractice.

According totheCodeofEthics, whichofthefollowing statementsis NOTcorrect? CFAInstitute membersarerequiredto: comply with the CFA Institute Global Investment Performance Standards.

maintainandimprovetheircompetenceandstriveto maintainthecompetenceof othersinthe profession.

usereasonablecareandexerciseindependent professional judgment.

Explanation

TheCFAInstitute-GIPSarevoluntarystandardsfortheindustry. Firmsarenotrequiredtocomply withthesestandards when presenting performance.TheotherstatementsareeachcomponentsoftheCFAInstituteCodeofEthics.

ThefirstcomponentoftheCodeofEthicsdoes NOTexplicitlysaythataCFAInstitute member willactinacertain manner with respectto whichofthefollowing groups?

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Question #20 of 23

Question ID:434181

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Question #21 of 23

Question ID:412279

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Question #22 of 23

Question ID:412281

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Prospectiveclients.

CFAInstitute membersandcandidatesintheCFAProgram.

Explanation

ParticipantsintheCFAProgram arenotspecifically mentionedintheCodeofEthics.Componentone mentionsdutiestothe public,clients, prospects,employers,employees,colleagues,andother participantsinthe globalcapital markets.

Whichofthefollowing isacomponentoftheCodeofEthics? CFAInstitute membersshall: disclose to their employer all matters that reasonably could be expected to interfere with their duty to their employer or ability to make unbiased and objective recommendations.

makereasonableeffortstodetectand preventviolationsbythose whoareundertheir supervision.

striveto maintainandimprovetheircompetenceandthecompetenceofothersinthe profession.

Explanation

Striving to maintainandimprovetheircompetenceandthecompetenceofothersinthe professionisoneofthecomponents oftheCodeofEthics, whereastheotherstatementsare partoftheStandardsofProfessionalConduct.

Allofthefollowing arecomponentsoftheCodeofEthicsEXCEPT:

striving to maintain and improve their competence and the competence of others in the profession.

demonstrating diligence,independence,andthoroughness when preparing investmentreports.

using reasonablecareandexercising independent professional judgment.

Explanation

Demonstrating diligence,independence,andthoroughness when preparing investmentreportsisfoundintheStandardsof ProfessionalConduct.

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Question #23 of 23

Question ID:461159

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honesty, professionalism,and goodwill. integrity,competence,andrespect.

Explanation

Integrity,competence,andrespectareincludedinthefirstcomponentoftheCodeofEthics.

Whichofthefollowing isleastlikelyacomponentoftheCodeofEthics? Indealing withthe public,clients, prospects, employers,employees,andfellow members,CFAInstitute membersshallact with:

humility. respect. integrity.

Explanation