ShooterMcCFA

Francisco Perez, CFA, CPA, is a portfolio manager for an investment advisory firm. Due to the prominence of his position, he is often invited to attend free marketing and educational events hosted by firms which seek to inform the investment community about their investment processes. One such firm, Unlimited Horizons, has invited Perez to attend free educational events which qualify for Continuing Education credits which could help Perez maintain his CPA designation. Perez should most likely:

A) decline to attend the event as it could result in a violation of Standard I(B) "Independence and Objectivity."

B) accept the invitation as no cash compensation is involved and the primary intent is to educate and inform the investment community.

C) decline to attend the event as it could result in a violation of Standard I(A) "Knowledge of the Law."

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Perez should decline the invitation as it creates the impression of lack of independence. If he does not accept the free continuing education courses, he would have to pay for them some other way so the free courses are a form of compensation. Nothing in the vignette suggests the free classes are illegal.

ShooterMcCFA

The following information involves two research analysts at a brokerage firm.

• Erik Bagenot, CFA, is preparing a research report on Global Enterprises, Inc. In preparing the report, he uses materials from many sources. For example, he uses factual information published by Standard & Poor's Corporation without acknowledging the source. He also uses excerpts from a research report prepared by another analyst. Bagenot makes only a slight change in wording for these excerpts, but acknowledges the source.
• Sally Wain, who is currently enrolled in the CFA program, is preparing a research report on Manson Telecommunications. She attends a conference in which several investment experts provide their views about the future prospects of this company. Wain cites several quotations from these investment experts in her report without specific reference.

According to CFA Institute Standards of Professional Conduct involving prohibition against plagiarism, which of the following statements is CORRECT?

A) Wain violated the Standards, but Bagenot did not.

B) Both Bagenot and Wain violated the Standards.

C) Bagenot violated the Standards, but Wain did not.

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Bagenot complied with Standard I(C), which permits publishing factual information from Standard & Poor's without acknowledgment and using excerpts with acknowledgment. Wain committed plagiarism because she failed to give specific references for the quotations that she used.

ShooterMcCFA

A money manager works for a full-service brokerage firm. After meeting with a new client and gathering all relevant information, the money manager says that she thinks her firm can perform all the financial services the new client needs. With respect to Standard I(C), Misrepresentation, this:

A) may not be a violation if the representation was made orally.

B) is a violation because she cannot make statements like this under any circumstances.

C) may not be a violation if the manager's opinion is based upon the factual information gathered.

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There is no violation if the opinion is based upon the factual information gathered and the firm’s actual capabilities. This is true whether or not the representation was written, oral, or electronic. None of the other choices are correct.

ShooterMcCFA

At the time of its initial public offering (IPO), a mutual fund is invested primarily in junk bonds. As part of its strategy, it is also invested in some zero-coupon U.S. Treasury bonds. The amount of the investment in the Treasury bonds is such that their maturity value equals 90% of the current value of the fund. Which of the following may a CFA Institute member say to her clients concerning the fund at issuance?

A) A CFA Institute member may not make either of these statements.

B) Since the fund is backed by the U.S. government, you know you will get your money back.

C) The fund is virtually default risk free.

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Standard I(C), Misrepresentation, prohibits making statements that mention a guarantee of returns or misrepresent the true nature of the investment.

ShooterMcCFA

All of the following violate Standard I(C), Misrepresentation, EXCEPT:

A) copying a proprietary computerized spreadsheet without seeking authorization from the creators.

B) presenting factual information published by recognized statistical reporting services without acknowledgment.

C) citing quotes attributable to "investment experts" without specific references.

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Standard I(C), Misrepresentation, permits using recognized sources of factual information such as Standard & Poor’s Corporation and Moody’s Investors Service without acknowledgment.

ShooterMcCFA

Wes Smith, CFA, has been working toward the completion of a Master of Science in Finance. He has passed all the necessary courses and written the necessary thesis. He still must defend the thesis in one month. Smith’s thesis advisor assures him that he will pass the thesis defense. Smith has new business cards printed with “M.S. in Finance” after his name. This is a violation of:

A) Standard VII(B), Reference to CFA Institute, the CFA Designation, and the CFA Program.

B) Standard I(C), Misrepresentation.

C) none of the Standards if Smith does not make the cards public until after he defends his thesis and receives his degree.

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If the cards were distributed today he would be in violation of Standard I(C), Misrepresentation. However, if Smith does not make the cards public until after he receives the degree, there is no violation.

ShooterMcCFA

According to CFA Institute Standards of Professional Conduct, which of the following is NOT a form of plagiarism?

A) Citing specific quotations supposedly attributable to "leading analysts" and "investment experts" without specific reference.

B) Presenting statistical estimates of forecasts prepared by others with the source identified, but without qualifying statements or caveats that may have been used.

C) Using factual information published by recognized financial and statistical reporting services or similar sources without an acknowledgment.

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Standard I(C) provides that "factual information published by recognized financial and statistical reporting services or similar sources" may be used without an acknowledgment.

ShooterMcCFA

A copyrighted technique for measuring the downside risk of an investment has just been revealed to the public. If an analyst adopts the technique, he must cite the use of the technique in all research reports in which the technique is used EXCEPT:

A) if the analyst does not modify the technique at all.

B) if the analyst uses reasonable care and verifies that the technique provides superior results.

C) Neither of these answers provide grounds for an exception.

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Neither of the answers in this question provide adequate grounds for not citing the source of the methodology. Although “verifying” the technique is a good idea and congruent with the Code and Standards, the analyst still needs to cite the use of the copyrighted technique even after modifying it slightly to avoid violation of Standard I(C), Misrepresentation.

ShooterMcCFA

According to CFA Institute Standards of Professional Conduct, which of the following statements about the prohibition against plagiarism is most correct? The prohibition against plagiarism applies to written materials:

A) oral communications, and telecommunications.

B) only.

C) and oral communications only.

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The prohibition against plagiarism applies to all three areas.

ShooterMcCFA

An analyst preparing a report needs to cite which of the following?

A) Estimates of betas provided by Standard & Poor's.

B) A recent quote from the Federal Reserve Chairman.

C) The individual who developed a chart from the same firm.

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Statistics provided by a recognized agency, such as Standard and Poor’s, do not need to be cited. Charts, quotes, and algorithms developed by the firm would need to be cited when they are used but the individual(s) who developed the materials within the firm do not need to be cited.