Reading 1: Code of Ethics and Standards of Professional Condu 2011, center, style, label, class

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Session 1: Ethical and Professional Standards
Reading 1: Code of Ethics and Standards of Professional Conduct

LOS b: State the six components of the Code of Ethics and the seven Standards of Professional Conduct.

 

Which of the following activities would be following a component of the Code of Ethics explicitly?

A) Attending continuing education seminars on investing and inviting colleagues to come along.

B) Consulting with colleagues about opinions you reach in your research.

C) Maintaining a list of colleagues who have violated the CFA Institute standards.

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The Code states that a member shall “Maintain and improve their professional competence and strive to maintain and improve the competence of other investment professionals.” None of the other answers qualify.

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According to the Code of Ethics, the professional judgment of a member should be:

A) guided by the SEC guidelines.

B) independent.

C) dependent on that of his/her colleagues.

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The Code of Ethics states that the CFA Institute member shall “Use reasonable care and exercise independent professional judgment.” None of the other answers resemble anything in the Code.

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According to the Code of Ethics, which of the following statements is NOT correct? CFA Institute members are required to:

A) comply with the CFA Institute Performance Presentation Standards.

B) use reasonable care and exercise independent professional judgment.

C) maintain and improve their competence and strive to maintain the competence of others in the profession.

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The CFA Institute-PPS are voluntary standards for the industry. Firms are not required to comply with these standards when presenting performance. The other statements are each components of the CFA Institute Code of Ethics.

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

A) Contractual provisions.

B) Independent judgment.

C) Competence.

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Contractual provisions are not part of the Code of Ethics.

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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) Colleagues in the investment profession.

B) The SEC.

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.

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

A) using reasonable care and exercising independent professional judgment.

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

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

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

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

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

B) use particular care in determining applicable fiduciary duty.

C) use reasonable care and exercise independent professional judgment.

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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.

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In dealing with the public and others, the CFA Institute Code of Ethics indicates that CFA Institute members will act with:

A) confidence, knowledge, and high ethical standards.

B) integrity, competence, and respect.

C) honesty, professionalism, and goodwill.

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Integrity, competence, and respect are included in the first component of the Code of Ethics.

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Which of the following is NOT an act explicitly referred to in the Code of Ethics?

A) Using reasonable care when making investment recommendations.

B) Improve professional competence.

C) Giving free introductory seminars on investing to the public.

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Although the Code says a member has obligations to the public, educating the general public for whatever reason is not implied.

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Which of the following is a component of the Code of Ethics?

A) Members and candidates shall not engage in any conduct or commit any act that compromises the integrity of the CFA designation or the integrity or validity of the examinations leading to the award of the right to use the CFA designation.

B) Members shall not copy or use, in substantially the same form as the original, material prepared by another without acknowledging and identifying the name of the author, publisher, or source of such material. Members may use, without acknowledgment, factual information published by recognized financial and statistical reporting services or similar sources.

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

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This is a component of the Code of Ethics. Others pertain to the Standards of Practice.