Q5. Which of the following is least accurate regarding the promotional announcement of Patel passing the Level 3 exam?

A)   The fact that a promotional announcement was made violates the restrictions on misrepresenting the meaning of the CFA designation.

B)   The promotional announcement uses the letters “CFA” as a noun and hence is an improper use of the designation.

C)   The announcement violates the Code of Ethics because it implies that obtaining a CFA charter leads to superior performance.

Q6. With respect to the choice of broker, did Patel violate any CFA Institute Standards of Professional Conduct?

A)   No.

B)   Yes, since Patel is obligated to seek the best possible price and execution for all clients.

C)   Yes, since Patel failed to properly notify Singh that using TradeRight would lead to higher commissions and opportunity costs.

Q7. An analyst thinks that a major change in the tax law will benefit holders of utility company stocks. She immediately begins calling all her clients and telling them of the upside potential of investing in such assets now. Based upon this information, this is most likely:

A)   a violation of Standard V(A), Diligence and Reasonable Basis.

B)   a violation of Standard III(C), Suitability.

C)   congruent with Standard V(A), Diligence and Reasonable Basis.

答案和详解如下：

Q5. Which of the following is least accurate regarding the promotional announcement of Patel passing the Level 3 exam?

A)   The fact that a promotional announcement was made violates the restrictions on misrepresenting the meaning of the CFA designation.

B)   The promotional announcement uses the letters “CFA” as a noun and hence is an improper use of the designation.

C)   The announcement violates the Code of Ethics because it implies that obtaining a CFA charter leads to superior performance.

Correct answer is A)

An announcement that a member of a firm has received the right to use the CFA® designation is not a violation of the Code or Standards. However, Standard VII(B) requires that any reference to the Charter must not misrepresent or exaggerate the meaning or implications of the CFA designation. A Charterholder cannot claim that holding a Charter leads to superior performance results. The letters “CFA” can only be used as an adjective (never a noun, as in “he is a CFA”). Finally, passing all three exams does not give one the right to use the designation. All criteria must be met (e.g., experience requirements) before Patel can use the designation.

Q6. With respect to the choice of broker, did Patel violate any CFA Institute Standards of Professional Conduct?

A)   No.

B)   Yes, since Patel is obligated to seek the best possible price and execution for all clients.

C)   Yes, since Patel failed to properly notify Singh that using TradeRight would lead to higher commissions and opportunity costs.

Correct answer is A)

Since Singh directed Patel to use TradeRight, this should be considered client-directed brokerage. While Patel should inform Singh of the implications of that choice, Patel has no option but to follow the client’s direction according to Standard III(A) Loyalty, Prudence, and Care. Singh was fully aware of the fees charged by TradeRight relative to other brokerage firms and elected to use TradeRight anyway. Investment managers are obligated to seek the best price and execution in the absence of client direction.

Q7. An analyst thinks that a major change in the tax law will benefit holders of utility company stocks. She immediately begins calling all her clients and telling them of the upside potential of investing in such assets now. Based upon this information, this is most likely:

A)   a violation of Standard V(A), Diligence and Reasonable Basis.

B)   a violation of Standard III(C), Suitability.

C)   congruent with Standard V(A), Diligence and Reasonable Basis.

Correct answer is B)

According to Standard III(C), the analyst needs to determine the suitability of an investment for each client. It is doubtful that all her clients are identical in their needs. According to the information, the analyst mentions the upside potential but does not mention the downside risk. Although the information says that she thinks that the change in the tax law will benefit holders of utility company stocks and says nothing of how she arrived at this conclusion, we do not know if she has or has not made her decision on a reasonable basis.