Reading 2-IV: Standards of Professional Conduct & Guida

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Q1. An analyst belongs to a nationally recognized charitable organization, which requires dues for membership. The analyst has worked out a deal where he provides money management advice in lieu of paying dues. Which of the following must the analyst do?

A) Resign from the position because the relationship is a conflict with the Standards.

B) Nothing since he is not an employee of the charitable organization.

C) Must treat the charitable organization as his employer.

Q2. Which of the following statements is most correct under the Code and Standards?

A) CFA Institute members are prohibited from undertaking independent practice in competition with their employer.

B) Consent from the employer is necessary to permit independent practice that could result in compensation or other benefits in competition with the member's employer.

C) Members are prohibited from making arrangements or preparations to go into competitive business before terminating their relationship with their employer.

Q3. Janet Thompson, CFA, is employed as an analyst by Nationwide Securities. According to CFA Institute Standards of Professional Conduct, which of the following statements about Thompson's duty to Nationwide is FALSE? Thompson must refrain from:

A) engaging in any conduct that would injure Nationwide.

B) engaging in independent competitive activity that could conflict with the business of Nationwide unless she receives written consent.

C) making arrangements to go into a competitive business before terminating her relationship with Nationwide.

Q4. Nick O'Donnell, CFA, unsuspectingly joins the research team at Wickett & Co., an investment banking firm controlled by organized crime. None of the managers at Wickett are CFA Institute members. Because of his tenuous situation at Wickett, O'Donnell begins making preparations for independent practice. He knows he will be terminated if he informs management at Wickett that he is preparing to leave. Consequently, he determines that "if he can just hang on for one year, he will likely have a client base sufficient for him to strike out on his own." This action is:

A) a violation of his fiduciary duties.

B) a violation of his duty to disclose conflicts to his employer.

C) not a violation of his duty to employer.