Question 1
Procedures a firm should adopt in order to comply with Standard III(B), Fair Dealing are least likely to include:
A) establishing rules about employee trading activities. B) maintaining a list of clients and their holdings. C) requiring clients to "check in" with management at least once per week to facilitate simultaneous dissemination of information regarding recommendations. D) developing written trade allocation procedures.
The correct answer was C) requiring clients to "check in" with management at least once per week to facilitate simultaneous dissemination of information regarding recommendations. The fair dealing standard does not require clients to "check in" with management at least once per week to facilitate simultaneous dissemination of information regarding recommendations. Achieving simultaneous dissemination is a responsibility of the firm, not the clients. This question tested from Session 1, Reading 2-III, LOS B.
Question 2
Brian Crane learns that he has passed the Level II CFA exam on his first attempt and registers for the Level III exam. Which of the following is Crane prohibited from doing under the Code of Ethics and Standards of Professional Conduct?
A) Putting "CFA Candidate" after his name on his business card. B) Telling people that he is a Level III candidate. C) Mentioning in his professional resume that he has passed Level II of the CFA exam on his first attempt. D) Publishing a brochure which includes a statement that he is a participant in the Chartered Financial Analyst program and is a Level III Candidate.
The correct answer was A) Putting "CFA Candidate" after his name on his business card. Standard VII(B) Reference to CFA Institute, the CFA Designation, and the CFA Program limits the use of the CFA designation to those who have passed all three levels of the CFA Program, have received their charters, and are dues-paying charterholders in good standing. There is no designation for someone who has passed one or more levels of the exam. Candidates may state that they have completed one or more of the levels, but to say they are candidates, they must be registered to take the next scheduled CFA exam. A candidate who has not registered may say, "I passed Level I (II or III) of the CFA Program in (year)." A candidate without work experience who has passed Level III may say, "I have passed all three levels of the exam and will be eligible for the CFA Charter upon completion of the required work experience." The candidate cannot imply they hold any partial designation, such as CFA II.
This question tested from Session 1, Reading 2-VII, LOS B.
Question 3
Natalia Gregory, CFA, represents Value Advisors. She is approached by her personal physician, whose assistant has been given a paper that describes a tender offer that Gallant Company is preparing to make for Calypso Company. Gregory’s physician would like Gregory to purchase shares of Calypso in his personal account. Gregory should:
A) not acquire the shares until she has contacted Gallant's management and encouraged them to publicly announce the merger discussions. B) not acquire the shares until Gallant's management has announced the merger discussions and the public has had an opportunity to react to the announcement. C) proceed to acquire the shares because the information was neither misappropriated nor obtained in breach of a duty. D) not acquire the shares.
The correct answer was D) not acquire the shares. Standard II(A) Material Nonpublic Information prohibits members from taking investment action if they possess material nonpublic information. Gregory must wait until the information is made public before acting or causing others to act. She can act on the information as soon as it becomes public; she does not have to wait until the public has an opportunity to react to the information.
This question tested from Session 1, Reading 2-II, LOS A.
Question 4
Myron Cornforth, CFA, of Allied Management, is handed a research report on Sandstone Corporation by his supervisor, Melvin Block, and is told by Block, “take this report and do whatever you need to so we can get these Sandstone shares out of here!” Cornforth reviews the report, which states that the outlook for Sandstone’s future earnings growth is bleak. The report was written by Virginia Jones, who is also employed by Allied and supervised by Block. Cornforth changes the analysis to encourage potential purchasers to buy Sandstone shares by omitting certain facts and by carefully editing the less-than-favorable material. The report is then printed under Cornforth’s name. The Code and Standards were violated by:
A) Cornforth in editing a research report to make it misleading, and in using material written by Jones without identifying the author, and by Block for failing to exercise reasonable supervision over Cornforth. B) Cornforth in editing a research report to make it misleading, and by Block in failing to exercise reasonable supervision over Cornforth. C) Cornforth in using material written by Jones without identifying the author, and by Block in failing to exercise reasonable supervision over Cornforth. D) Cornforth in editing a research report to make it misleading, and in using material written by Jones without identifying the author. The correct answer was A) Cornforth’s writing a misleading report, even when ordered to by his supervisor, violates Standard I(C) Misrepresentation. Conforth's use of Jones' work without attribution also violates Standard I(C) Misrepresentation. Block’s failure to supervise reasonably is a violation of Standard IV(C), Responsibilities of Supervisors. This question tested from Session 1, Reading 2-I, LOS C.
Question 5 Rose Worth, CFA, is analyzing Transocean Trading Co., whose primary business is importing merchandise. A large increase in import tariffs has been proposed in Congress, and the likelihood that it would harm the import business has depressed Transocean’s stock price. Worth speaks with her Congressman, Jerome Horwitz, who tells her that he is certain the tariff increase does not have enough support to become law. Worth distributes a report that mentions her discussion with Horwitz and says, “Transocean’s earnings next quarter will be as expected because the tariff increase will not be enacted.” Worth has most likely:
A) violated the Standard related to communication with clients. B) not violated the Standards. C) violated the Standard related to preservation of confidentiality. D) violated the Standard related to material nonpublic information.
The correct answer was A) violated the Standard related to communication with clients. Worth’s statement about the outcome of the legislation and its effect on Transocean’s earnings fails to distinguish fact from opinion and this violates Standard V(B), Communication With Clients and Prospective Clients. Horwitz’s “certainty” does not make his prediction a fact. There is no reason to believe Worth’s discussion with Horwitz was confidential or that his opinion about the legislation’s prospects is material nonpublic information.
This question tested from Session 1, Reading 2-V, LOS B.
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发表于 2008-5-26 11:38
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