Reading - 2-I - LOS c: Q6-Q13 black, class

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6、Which of the following is NOT a form of plagiarism?

A)   Citing quotations said to be attributable to "leading analysts" or "investment experts" without specific reference.

B)   Using factual information published by a recognized financial statistics reporting service without acknowledgment.

C)   Presenting statistical forecasts by others with the sources identified but without the qualifying statements that may have been used by the originator.

D)   Making a verbal comment at a meeting with associates giving the impression the analysis is original when in reality it is attributable to another analyst.

7、According to CFA Institute Standards of Professional Conduct, which of the following is NOT a form of plagiarism?

A)   Using charts and graphs without stating their sources.

B)   Citing specific quotations supposedly attributable to "leading analysts" and "investment experts" without specific reference.

C)   Using factual information published by recognized financial and statistical reporting services or similar sources without an acknowledgment.

D)   Presenting statistical estimates of forecasts prepared by others with the source identified, but without qualifying statements or caveats that may have been used.

8、A copyrighted technique for measuring the downside risk of an investment has just been revealed to the public. If an analyst adopts the technique, he must cite the use of the technique in all research reports in which the technique is used EXCEPT:

A)   if the analyst uses reasonable care and verifies that the technique provides superior results.

B)   if the analyst modifies the technique slightly.

C)   none of these answers provide grounds for an exception.

D)   if the analyst does not modify the technique at all.

9、At the time of its initial public offering (IPO), a mutual fund is invested primarily in junk bonds. As part of its strategy, it is also invested in some zero-coupon U.S. Treasury bonds. The amount of the investment in the Treasury bonds is such that their maturity value equals 90 percent of the current value of the fund. Which of the following may a CFA Institute member say to her clients concerning the fund at issuance?

A)   A CFA Institute member may not make any of these statements.

B)   Since the fund is backed by the U.S. government, you know you will get your money back.

C)   Since the speculative investments in the fund are certain to retain at least 10 percent of their value, we know that combined with the value of Treasury bonds, the value will be greater than your initial investment.

D)   The fund is virtually default risk free.

10、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 fiduciary duties owed to clients under the Standards.

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

C)   a violation of the Standard concerning the use of nonpublic information, since shares can be manipulated to obtain the desired return.

D)   not in violation of the Code and Standards.

11、According to CFA Institute Standards of Professional Conduct, which of the following statements about the prohibition against plagiarism is most correct? The prohibition against plagiarism applies to written materials:

A)   oral communications, and telecommunications.

B)   only.

C)   and oral communications only.

D)   and telecommunications only.

12、An analyst preparing a report does NOT need to cite the use of which of the following?

A)   Charts developed by a colleague in the same firm.

B)   A recent quote from Alan Greenspan.

C)   Estimates of betas provided by Standard & Poor's.

D)   The use of a new algorithm for computing betas developed by a group of university professors.

13、Steve Barton, CFA, used to work for Advisors, Inc. After he left Advisors, Barton developed a new screening methodology for determining which stocks to include in a portfolio. Barton is on friendly terms with his former colleagues at Advisors and shares his screening methodology with them. If Advisors uses the screening methodology without notifying Barton, then:

A)   Advisors must assume the responsibility of any client losses.

B)   Barton must assume the responsibility of any client losses.

C)   Barton must resume employment with Advisors.

D)   Advisors has violated Standard I(C), Misrepresentation.

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6、Which of the following is NOT a form of plagiarism?

A)   Citing quotations said to be attributable to "leading analysts" or "investment experts" without specific reference.

B)   Using factual information published by a recognized financial statistics reporting service without acknowledgment.

C)   Presenting statistical forecasts by others with the sources identified but without the qualifying statements that may have been used by the originator.

D)   Making a verbal comment at a meeting with associates giving the impression the analysis is original when in reality it is attributable to another analyst.

The correct answer was  B)

Members may not generally use material without acknowledging the original source, but an exception is made for factual information published by recognized financial and statistical reporting services.

7、According to CFA Institute Standards of Professional Conduct, which of the following is NOT a form of plagiarism?

A)   Using charts and graphs without stating their sources.

B)   Citing specific quotations supposedly attributable to "leading analysts" and "investment experts" without specific reference.

C)   Using factual information published by recognized financial and statistical reporting services or similar sources without an acknowledgment.

D)   Presenting statistical estimates of forecasts prepared by others with the source identified, but without qualifying statements or caveats that may have been used.

The correct answer was  C)

Standard I(C) provides that "factual information published by recognized financial and statistical reporting services or similar sources" may be used without an acknowledgment.

8、A copyrighted technique for measuring the downside risk of an investment has just been revealed to the public. If an analyst adopts the technique, he must cite the use of the technique in all research reports in which the technique is used EXCEPT:

A)   if the analyst uses reasonable care and verifies that the technique provides superior results.

B)   if the analyst modifies the technique slightly.

C)   none of these answers provide grounds for an exception.

D)   if the analyst does not modify the technique at all.

The correct answer was  C)

None of the answers in this question provide adequate grounds for not citing the source of the methodology. Although “verifying” the technique is a good idea and congruent with the Code and Standards, the analyst still needs to cite the use of the copyrighted technique even after modifying it slightly to avoid violation of Standard I(C), Misrepresentation.

9、At the time of its initial public offering (IPO), a mutual fund is invested primarily in junk bonds. As part of its strategy, it is also invested in some zero-coupon U.S. Treasury bonds. The amount of the investment in the Treasury bonds is such that their maturity value equals 90 percent of the current value of the fund. Which of the following may a CFA Institute member say to her clients concerning the fund at issuance?

A)   A CFA Institute member may not make any of these statements.

B)   Since the fund is backed by the U.S. government, you know you will get your money back.

C)   Since the speculative investments in the fund are certain to retain at least 10 percent of their value, we know that combined with the value of Treasury bonds, the value will be greater than your initial investment.

D)   The fund is virtually default risk free.

The correct answer was  A)

Standard I(C), Prohibition against Misrepresentation, prohibits making statements that mention a guarantee of returns or misrepresent the true nature of the investment.

10、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 fiduciary duties owed to clients under the Standards.

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

C)   a violation of the Standard concerning the use of nonpublic information, since shares can be manipulated to obtain the desired return.

D)   not in violation of the Code and Standards.

The correct answer was  B)  

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.

11、According to CFA Institute Standards of Professional Conduct, which of the following statements about the prohibition against plagiarism is most correct? The prohibition against plagiarism applies to written materials:

A)   oral communications, and telecommunications.

B)   only.

C)   and oral communications only.

D)   and telecommunications only.

The correct answer was  A)

The prohibition against plagiarism applies to all three areas.

12、An analyst preparing a report does NOT need to cite the use of which of the following?

A)   Charts developed by a colleague in the same firm.

B)   A recent quote from Alan Greenspan.

C)   Estimates of betas provided by Standard & Poor's.

D)   The use of a new algorithm for computing betas developed by a group of university professors.

The correct answer was  C)

Statistics provided by a recognized agency, such as Standard and Poor’s, do not need to be cited. Charts, quotes, and algorithms developed by individuals must be cited when they are used.

13、Steve Barton, CFA, used to work for Advisors, Inc. After he left Advisors, Barton developed a new screening methodology for determining which stocks to include in a portfolio. Barton is on friendly terms with his former colleagues at Advisors and shares his screening methodology with them. If Advisors uses the screening methodology without notifying Barton, then:

A)   Advisors must assume the responsibility of any client losses.

B)   Barton must assume the responsibility of any client losses.

C)   Barton must resume employment with Advisors.

D)   Advisors has violated Standard I(C), Misrepresentation.

The correct answer was  D)

According to Standard I(C), if an analyst or firm uses the work of others, they must seek authorization from the creators. Such work includes algorithms, such as a stock screening methodology.