1、A stockbroker who is a member of CFA Institute has a part-time housekeeper who also works for the CEO of Festival, Inc. One day the housekeeper mentions to the broker that she saw the CEO of Festival having a conversation at his home with John Tater, who is a nationally known corporate lawyer and consultant. The stockbroker is restricted from trading on this information: A) only if the broker knows that the meeting is non-public information. B) if the housekeeper says the meeting concerned a tender offer and the broker knows that it is non-public information. C) if the broker is friends with the CEO of Festival. D) for all of the reasons listed here. The correct answer was B) Standard II(A), Material Nonpublic Information, states “a member cannot trade or cause others to trade in a security while the member possesses material nonpublic information” A tender offer would certainly be material nonpublic information. Knowing that the meeting took place, and nothing else, does not restrict the broker. A reasonable investor would need to know more to determine if the information was material. Certainly being friends with the CEO is not an issue, so the answer “all of the reasons” is not correct. 2、Carl Weather, CFA, is the chief financial officer of Talbot Enterprises. Based upon inside information about Talbot’s favorable future prospects received from his company’s analysts, Weather concludes that Talbot’s common stock price is substantially undervalued in the market. With the approval of Talbot’s Board of Directors, Weather announces a program for his firm to repurchase $100 million of its own stock in the market. Talbot’s stock price rises immediately after the announcement of the repurchase program. Reese Winter, a CFA Institute member, is Weather’s assistant. While waiting in Weather’s office Winter reads an internal memo marked “confidential” from Talbot’s chief accountant to Weather. The memo states that Talbot sustained an unexpected substantial profit during the past quarter, and its earnings projections show a substantial increase compared with previous estimates. Winter uses her cell phone to call her brother and discloses this information to him. Her brother immediately buys 1000 shares of Talbot’s stock. Did the actions of Weather and Winter violate Standard II(A): Material Nonpublic Information? A) Weather: Yes, Winter: No. B) Weather: No, Winter: Yes. C) Weather: Yes, Winter: Yes. D) Weather: No, Winter: No. The correct answer was
B) Weather did not violate Standard II(A) because this prohibition applies to recipients who are not directly or indirectly associated with the firm the material nonpublic information is about. As a corporate insider, Weather can use insider information to benefit his firm’s shareholders. Winter violated Standard II(A) because the information was both material and nonpublic. 3、An analyst is allowed to trade on information that he has predicted, such as a corporate action or event, using perceptive assembly and analysis of material public information or nonmaterial, non-public information. This is called the: A) deduction theory. B) assessment theory. C) creation theory. D) mosaic theory. The correct answer was
D) This deductive reasoning is legal (does not constitute trading with inside information) and is called the mosaic theory. 4、A stockbroker who is a CFA Institute member is called on the telephone by the CEO of a large company. The CEO asks to buy shares of the CEO’s company for the accounts of the CEO’s children. In the course of the conversation, the CEO says this will really pay off when the upcoming takeover goes through. The stockbroker checks her sources and finds no information about the takeover. In this case the broker should: A) only execute the order in compliance with Standard III(A), Loyalty, Prudence, and Care. Since the client is buying the stock for the children, there is not a problem. B) execute the order for all clients as required by Standard III(B), Fair Dealing. C) first execute the trade for the children and then use public information to recommend the stock to other clients. D) do none of the actions listed here. The correct answer was D) Doing any of these actions would be a violation of Standard II(A), Material Nonpublic Information. Members and Candidates must not act or induce others to act on material nonpublic information. 5、Don Benjamin, CFA, is the compliance officer for a large brokerage firm. He wants to prevent the communication of material nonpublic information and other sensitive information from his firm’s investment banking and corporate finance departments to its sales and research departments. The most common and widespread approach that Benjamin can use to prevent insider trading by employees is the: A) Wall Street Rule. B) legal list. C) mosaic approach. D) fire wall. The correct answer was D) To comply with Standard II(A), a fire wall provides an information barrier that prevents communication of material nonpublic information and other sensitive information from one department to another within a firm. | 
发表于 2008-4-18 15:55
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