Ethical and Professional Standards 【Reading 1】Sample 2012, following, statements, accordance

bapswarrior

In accordance with Standard III (A) Loyalty, Prudence and Care, which of the following statements is least accurate? Members and Candidates should:

A) utilize client brokerage to the sole benefit of the client.

B) submit to clients, at least quarterly, itemized statements detailing all of the period’s transactions.

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

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Because of the time and expense involved in voting a proxy, Members and Candidates are not required to vote every proxy. A cost benefit analysis can be performed to determine if it is necessary to vote a proxy.

bapswarrior

The first component of the Code of Ethics does NOT explicitly say that a CFA Institute member will act in a certain manner with respect to which of the following groups?

A) The SEC.

B) Colleagues in the investment profession.

C) The public.

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The SEC is not mentioned in the Code of Ethics. Component one mentions duties to the public, clients, prospects, employers, employees, colleagues, and other participants in the global capital markets.

bapswarrior

Which of the following is NOT part of the CFA Institute Code of Ethics?

A) Independent judgment.

B) Contractual provisions.

C) Competence.

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Contractual provisions are not part of the Code of Ethics.

bapswarrior

According to the CFA Institute Code of Ethics, CFA Institute members shall:

A) maintain knowledge and comply with all applicable laws, rules and regulations.

B) act with integrity, competence, diligence, respect, and in an ethical manner when dealing with the public, clients, prospective clients, employers, employees, colleagues in the investment profession, and other participants in the global capital markets.

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

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Acting with integrity, competence, diligence, respect, and in an ethical manner when dealing with the public, clients, prospective clients, employers, employees, colleagues in the investment profession, and other participants in the global capital markets is one of the six components of the Code of Ethics, whereas the other statements are part of the Standards of Professional Conduct

bapswarrior

All of the following are components of the Code of Ethics EXCEPT:

A) using reasonable care and exercising independent professional judgment.

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

C) demonstrating diligence, independence, and thoroughness when preparing investment reports.

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Demonstrating diligence, independence, and thoroughness when preparing investment reports is found in the Standards of Professional Conduct.

bapswarrior

The Code of Ethics does NOT explicitly say that a CFA Institute member shall do which of the following?

A) Exercise independent professional judgment.

B) Actively lobby for new laws to protect the public.

C) Act with integrity.

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The Code of Ethics says nothing about a CFA Institute member lobbying for new laws. In fact, legal issues are not a part of the Code. The Standards of Professional Conduct say that the member shall obey laws.

bapswarrior

John Elliot, CFA, says that in issues of ethics he always puts the clients first according to the guidelines in the Code of Ethics. In doing so he is:

A) not correct, because no such ordering or priority is given in the Code.

B) correct.

C) not correct, because his first duty is to the public.

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Component one mentions duties to the public, clients, prospects, employers, employees, and fellow members. No ordering of priorities is given.

bapswarrior

Which of the following is a component of the Code of Ethics? CFA Institute members shall:

A) use reasonable care and exercise independent professional judgment.

B) not knowingly participate or assist in any violation of laws, rules, or regulations.

C) use particular care in determining applicable fiduciary duty.

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Using reasonable care and exercising independent professional judgment is one of the components of the Code of Ethics, whereas the other statements are part of the Standards of Professional Conduct.

bapswarrior

The CFA Institute Code of Ethics least likely requires a Member or Candidate to:

A) Strive to maintain and improve the competence of others in the profession.

B) Practice and encourage others to practice in a professional and ethical manner that will reflect credit on members and their profession.

C) Understand and comply with all applicable laws, rules, and regulations.

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Understanding and complying with all applicable laws, rules, and regulations is required by Standard I(A) – Knowledge of the Law. The other choices are included in the Code of Ethics.

bapswarrior

According to the Code of Ethics, a member reflects credit on the profession when a member:

A) practices in a professional and ethical manner.

B) consults with other members on a regular basis.

C) places the clients first.

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Component four of the Code says that a member shall “Practice and encourage others to practice in a professional and ethical manner that will reflect credit on members and the profession.” Neither of the other choices are implied by the Code.