Reading 2-V: Standards of Professional Conduct & Guidanc

following, research, required, reports, likely

Q7. In preparing research reports, which of the following is least likely required or recommended by the Code and Standards?

A) Maintain copies of materials that were relied on in preparing the research report.

B) Attribute paraphrases and summaries of material prepared by others.

C) Send all reports to the firm's legal counsel to ensure compliance with securities laws.

Q8. oni Black, CFA, works for a portfolio management firm. Black is a partner of the firm and is primarily responsible for managing several large pension plans. Black has just finished a research report in which she recommends Zeta Corporation as a “Strong Buy.” Her rating is based on solid management in a growing and expanding industry. She just handed the report to the marketing department of the firm for immediate dissemination. Upon returning to her desk she notices a news flash by CNN reporting that management for Zeta Corporation is retiring. Black wishes she did not recommend Zeta Corporation as a “Strong Buy,” but believes the corporation is still a good investment regardless of the management. What course of action for Black is best? Black:

A) may send out the report as written as long as a follow up is disseminated within a reasonable amount of time reflecting the changes in management.

B) should revise the recommendation based on this new information.

C) should report the new information to her immediate supervisor so that they can determine whether or not the marketing department should send out the report as written.

Q9. In the preparation of a research report, a CFA Institute member may emphasize certain matters, touch briefly on others, and omit some altogether:

A) provided that the analyst both has a reasonable basis and is unconstrained by the Mosaic theory.

B) under no circumstances.

C) provided that the analyst has a reasonable basis for his or her actions.

Q10. An analyst has several groups of clients who are categorized according to their specific needs. Compared to research reports distributed to all of the clients, reports for a specific group:

A) will not be allowed because it violates the Standard III(B), Fair Dealing.

B) will definitely include more basic facts.

C) may generally exclude more basic facts.