Reading 2-VI: Standards of Professional Conduct & Guida

issues, black, purchase, class, his

Q1. An analyst routinely has the opportunity to offer his clients the opportunity to purchase “hot new issues.” He tells his clients that he will distribute each issue equally among those interested, with himself included in the distribution. The clients do not object to this. With respect to Standard VI(B), Priority of Transactions, this:

A) cannot be a violation because the clients know of the practice and agree.

B) may be a violation because it is impossible to distribute hot new issues equally.

C) may be a violation despite the clients' approval.

Q2. An analyst has the opportunity to offer his clients shares in a “hot new issue.” One of the analyst’s clients is his brother. When the new issue comes out, for those clients he deems it would be appropriate, he offers them an equal share. He includes his brother in that group. With respect to Standard VI(B), Priority of Transactions, this is:

A) congruent with the Standard if his brother is not a 'covered person'.

B) congruent with the Standard as long as he does not have a direct personal interest in his brother's account.

C) congruent with the Standard even if he has a direct personal interest in his brother's account.

Q3. An analyst, who is a CFA Institute member, manages a high-grade bond mutual fund. This is his only professional responsibility. When the analyst comes across a speculative stock investment that he feels is a good investment for his personal portfolio, the analyst:

A) is in violation of Standard IV(A), Loyalty to Employer, by spending time analyzing stocks when he should only analyze bonds.

B) may invest in the stock because the analyst would not purchase the stock for the bond portfolio he manages.

C) must notify his supervisor about the stock according to Standard VI(B), Priority of Transactions, to see if it is appropriate for the portfolio that he manages.

Q4. An analyst likes to trade options in her own account. She does not deem any of her client accounts suitable for option trading. When she finds a favorable options position, in accordance to Standard VI(B), Priority of Transactions, she should:

A) first tell her clients about it before acting herself.

B) act on it on her own behalf as she sees fit.

C) refrain from acting until she notifies her supervisor.