Reading 2-V: Standards of Professional Conduct & Guida

groups, several, reports, specific, research

Q9. 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) may generally exclude more basic facts.

C) will definitely include more basic facts.

Q10. An analyst finds a stock with historical returns that are not correlated with interest rate changes. The analyst writes a report for his clients that have large allocations in fixed-income instruments and emphasizes the observed lack of correlation. The clients with allocations of fixed income instruments are the only clients to see the report. According to Standard V(B), Communication with Clients and Prospective Clients, the analyst has:

A) violated the Standard concerning fair dealings with all clients.

B) violated the article in the Standard concerning facts and opinions.

C) not violated the Standard.

Q11. Joni 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 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.

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