Reading 2-IV: Standards of Professional Conduct & Guidan

following, white, examples, black, style

Q1. All of the following are poor examples of supervisory responsibility EXCEPT:

A) Proper supervision is not exercised because the supervisor's income is partially based on unsupervised or improper trading activity.

B) Incorporating a professional conduct evaluation as part of an employee’s performance review.

C) Poor procedures allow a portfolio manager to designate a trade to an account or portfolio after the outcome of the trade is known.

A manager has pointed out that his firm has experienced significant expansion over the past few years. Until recently, its Q2. Legal Department was responsible for the firm's compliance activities. Now, however, the legal and compliance

functions have been separated. A compliance officer has been formally designated and a comprehensive compliance program has been put in place.

In order to function effectively, the compliance officer must have the authority:

A) to hire and fire personnel.

B) to affect, control, and guide employee behavior and to respond to employee misconduct.

C) which is consistent with the most senior partner or executive officer in the firm.

Q3. According to the CFA Institute Standards of Professional Conduct, which of the following statements about members with

supervisory responsibility is FALSE? Members with supervisory responsibility:

A) are relieved of their supervisory responsibility if they delegate their supervisory duties to other members of CFA Institute.

B) must make reasonable efforts to detect violation of laws, rules, regulations, and the Code and Standards.

C) are expected to have in-depth knowledge of the Code and Standards and to apply this knowledge in discharging their supervisory responsibilities.

Q4. A firm recently hired Jill Taylor to be a managing supervisor in the firm. Taylor knows that all of her subordinate supervisors are members of CFA Institute and that they have a compliance system in place with respect to the Code and Standards. Under these conditions Taylor needs to:

A) neither of these choices.

B) rely on the current compliance system since the subordinate supervisors are subject to the Code and Standards.

C) review the compliance system for its adequacy.

Q5. According to Standard IV(C), a CFA Institute member who is in a supervisory role must have which of the following?

A) An in-depth knowledge of the Code and Standards.

B) Both of these.

C) A graduate degree.