Got these 3 wrong along with other 2 on ethics self test. Please advice.
Gaines, a financial analyst for Skinner Investment Counseling, is told by the investor relations representative for Firebird Avionics, a major aircraft parts manufacturer, that the firm is in the final stages of building a new fuel efficient jet engine. This information is divulged by Firebird at the most recent quarterly conference call for analysts. Gaines uses this information along with other information he obtained from the company and distributed to the public in a research report that includes a "buy" recommendation for Firebird stock. Which of the following statements is CORRECT: Gaines' actions did not violate the Code and Standards.
Gaines violated the Code and Standards because he used material nonpublic information.
Gaines violated the Code and Standards because he failed to separate opinion from fact.
Gaines violated the Code and Standards because he has a material misrepresentation in his report.
Marked A
Reese is portfolio manager for several clients. She uses the work of the highly skilled research analysts in her firm to support her investment decisions. Reese: Violated the Code and Standards because she was unfamiliar with the processes and procedures used by the analysts in coming to their conclusions.
Violated the Code and Standards because she did not independently verify the research herself.
Complied with the Code and Standards.
Violated the Code and Standards because she did not exercise diligence in making her investment decisions.
Marked A
Which of the following procedures would help maintain the independence and objectivity of financial analysts when making investment decisions and taking investment actions? All of the above.
Requiring analysts to disclose all personal holdings or beneficial ownership of securities.
Requiring analysts to disclose all relationships with companies they cover.
Prohibiting analysts from accepting valuable gifts.
Marked C作者: disiz64 时间: 2011-7-11 19:45
1. B. earnings calls for analysts are not a public method (even though pretty much everybody can participate in most calls)
2. C.
A is wrong because if the research analysts work at her company, she probably knows their methodology...
B is wrong because she *supported* her recommendations with the research--she didn't base her recommendations solely on the research.
D is wrong because there's no evidence that she was careless
3. A. Disclosure is always good. Gifts are bad (most of the times).作者: Micholien 时间: 2011-7-11 19:45
B, C, A.
Someone posted the first question a few days ago and claimed the answer was not B...I'm not sure how the info rcvd can NOT be seen as material nonpublic though...作者: JPSem 时间: 2011-7-11 19:45
acer Wrote:
-------------------------------------------------------
> Got these 3 wrong along with other 2 on ethics
> self test. Please advice.
>
> Gaines, a financial analyst for Skinner Investment
> Counseling, is told by the investor relations
> representative for Firebird Avionics, a major
> aircraft parts manufacturer, that the firm is in
> the final stages of building a new fuel efficient
> jet engine. This information is divulged by
> Firebird at the most recent quarterly conference
> call for analysts. Gaines uses this information
> along with other information he obtained from the
> company and distributed to the public in a
I thought C is wrong because the analyst is from her company, and in that case she has only to verify the research herself as said in the CFAI book
> research report that includes a "buy"
> recommendation for Firebird stock. Which of the
> following statements is CORRECT: Gaines' actions
> did not violate the Code and Standards.
> Gaines violated the Code and Standards because he
> used material nonpublic information.
> Gaines violated the Code and Standards because he
> failed to separate opinion from fact.
> Gaines violated the Code and Standards because he
> has a material misrepresentation in his report.
>
> Marked A
>
> Reese is portfolio manager for several clients.
> She uses the work of the highly skilled research
> analysts in her firm to support her investment
> decisions. Reese: Violated the Code and
> Standards because she was unfamiliar with the
> processes and procedures used by the analysts in
> coming to their conclusions.
> Violated the Code and Standards because she did
> not independently verify the research herself.
> Complied with the Code and Standards.
> Violated the Code and Standards because she did
> not exercise diligence in making her investment
> decisions.
>
> Marked A
>
> Which of the following procedures would help
> maintain the independence and objectivity of
> financial analysts when making investment
> decisions and taking investment actions? All of
> the above.
> Requiring analysts to disclose all personal
> holdings or beneficial ownership of securities.
> Requiring analysts to disclose all relationships
> with companies they cover.
> Prohibiting analysts from accepting valuable
> gifts.
>
> Marked C作者: JRossSter 时间: 2011-7-11 19:45
brafique Wrote:
-------------------------------------------------------
> B, C, A.
>
> Someone posted the first question a few days ago
> and claimed the answer was not B...I'm not sure
> how the info rcvd can NOT be seen as material
> nonpublic though...
Yes. I just answered this question with B and it was shown as wrong.作者: johnnyBuz 时间: 2011-7-11 19:45
that's bogus. that "for analysts" was a red flag that it was nonpublic info.
