karoliukas

Francisco Perez, CFA, CPA, is a portfolio manager for an investment advisory firm. Due to the prominence of his position, he is often invited to attend free marketing and educational events hosted by firms which seek to inform the investment community about their investment processes. One such firm, Unlimited Horizons, has invited Perez to attend free educational events which qualify for Continuing Education credits which could help Perez maintain his CPA designation. Perez should most likely:

A) accept the invitation as no cash compensation is involved and the primary intent is to educate and inform the investment community.

B) decline to attend the event as it could result in a violation of Standard I(B) "Independence and Objectivity."

C) decline to attend the event as it could result in a violation of Standard I(A) "Knowledge of the Law."

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Perez should decline the invitation as it creates the impression of lack of independence. If he does not accept the free continuing education courses, he would have to pay for them some other way so the free courses are a form of compensation. Nothing in the vignette suggests the free classes are illegal.

karoliukas

Marc Randall, CFA, is an investment analyst. During a meeting with a potential client, Randall's boss states that, "You can be sure our investments will always outperform Treasury Bonds because of our fine research staff members, like Marc." Randall knows that this statement is:

A) a violation of the Standard concerning prohibition against misrepresentation.

B) a violation of fiduciary duties owed to clients under the Standards.

C) not in violation of the Code and Standards.

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Under Standard I(C), members are forbidden from guaranteeing a specific rate of return on volatile investments. Therefore, the statement is in violation of the Standard.

karoliukas

Ellen Miamoto, CFA, is preparing a research report on an employment agency, Temp Help, Inc. She includes in her report:

• A copy of a paragraph from a report by the Wall Street research firm of Benson Smith.
• A graph Miamoto has modified based on an original graph prepared by Gordon Thompson that was published in the Wall Street Journal.
• A chart of national employment trends that Miamoto created using data from the U.S. government's Bureau of Labor Statistics.

In her report, Miamoto must identify and acknowledge:

A) Benson Smith, Gordon Thompson, and the Bureau of Labor Statistics.

B) Benson Smith and Gordon Thompson.

C) Benson Smith only.

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Standard I(C) Misrepresentation requires members to acknowledge and identify the author, publisher, or source of material they use in substantially the same form as the original. The use of Benson Smith’s original material and Gordon Thompson’s modified material must be acknowledged. The exception to this requirement is information from recognized financial and statistical reporting services, such as the government agencies that compile national economic statistics.

karoliukas

A CFA charterholder gathers the closing prices of a security from a widely read publication. The charterholder uses the data as part of a report she is preparing and fails to report the data source in the report. This is:

A) not a violation of Standard I(C) if the data can be gathered from several public sources.

B) a violation of Standard I(C).

C) not a violation of Standard I(C) if the data cannot be gathered from several public sources.

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Since the security prices represent factual information that can be verified from several sources, there is no violation. It could have been a violation had the information been exclusively published by the source.

karoliukas

Which of the following is most likely permitted under Standard I(C), Misrepresentation?

A) Using excerpts from reports prepared by others without acknowledgement.

B) Including an exhibit of the current yield curve in a report to a client without stating its source.

C) Citing quotes attributed to "investment experts" without specific reference.

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The current yield curve is factual information that is available from many recognized financial or statistical reporting services.

karoliukas

Based on CFA Institute Standards of Professional Conduct, which of the following statements is a violation of Standard I(C), Misrepresentation?

A) An investment manager recommends to a prospective client an investment in GNMA bonds because they are guaranteed by the federal government.

B) A young trainee bond trader tells a prospective client that she can assist the client in all the client's investment needs: equity, fixed income, and derivatives and based on her years of experience as an analyst in the business that an investment looks like it has lots of potential.

C) A broker says XYZ stock is very likely to double in value over the next six months.

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CFA Institute members, CFA charterholders, and CFA candidates are prohibited from misrepresenting their services or qualifications and inappropriate assurances about any investment or its return.

karoliukas

A money manager works for a full-service brokerage firm. After meeting with a new client and gathering all relevant information, the money manager says that she thinks her firm can perform all the financial services the new client needs. With respect to Standard I(C), Misrepresentation, this:

A) may not be a violation if the representation was made orally.

B) is a violation because she cannot make statements like this under any circumstances.

C) may not be a violation if the manager's opinion is based upon the factual information gathered.

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There is no violation if the opinion is based upon the factual information gathered and the firm’s actual capabilities. This is true whether or not the representation was written, oral, or electronic. None of the other choices are correct.

mouse123

A CFA charterholder in a managerial position is in the process of hiring new analysts. If the charterholder conducts background checks on the job applicants with respect to their character, the charterholder has:

A) violated the Code of Ethics by invading the applicants' privacy.

B) complied with Standard I(D) concerning professional misconduct.

C) complied with Standard VII(A) concerning conduct of members and candidates in the CFA Program.

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To avoid potential problems and comply with Standard I(D), employers are encouraged to conduct background checks on potential employees.

mouse123

Which of the following is least likely a violation of Standard I(D), Misconduct? Being:

A) convicted of a misdemeanor traffic offense.

B) intoxicated at the office.

C) convicted of a felony.

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According to Standard I(D)" Members shall not engage in any professional conduct involving dishonesty, fraud, deceit, or commit any act that reflects adversely on their professional reputation, integrity, or competence.." The standard is not intended to regulate one’s personal behavior.

mouse123

Which of the following actions most likely violates Standard I(D) Misconduct?

A) A Level I candidate is ejected from a hotel for attempting to pass a bad check.

B) A member’s market forecasts have been wrong in three consecutive quarters, prompting a formal complaint from a client.

C) A member pursues an employment opportunity with a competing firm, primarily as a means of securing a salary increase from her current employer.

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Any activity that reflects adversely on a member’s professional reputation, integrity, or competence is a violation of Standard I(D) Misconduct. As long as the member has a reasonable and adequate basis for all recommendations, simply being wrong does not call the member’s integrity or competence into question. A member can pursue an employment opportunity with a competitor as long as the member abides by the Standards related to Duties to Employers.