kasinkei

Wes Smith, CFA, has been working toward the completion of a Master of Science in Finance. He has passed all the necessary courses and written the necessary thesis. He still must defend the thesis in one month. Smith’s thesis advisor assures him that he will pass the thesis defense. Smith has new business cards printed with “M.S. in Finance” after his name. This is a violation of:

A) none of the Standards if Smith does not make the cards public until after he defends his thesis and receives his degree.

B) Standard VII(B), Reference to CFA Institute, the CFA Designation, and the CFA Program.

C) Standard I(C), Misrepresentation.

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If the cards were distributed today he would be in violation of Standard I(C), Misrepresentation. However, if Smith does not make the cards public until after he receives the degree, there is no violation.

kasinkei

The following information involves two research analysts at a brokerage firm.

• Erik Bagenot, CFA, is preparing a research report on Global Enterprises, Inc. In preparing the report, he uses materials from many sources. For example, he uses factual information published by Standard & Poor's Corporation without acknowledging the source. He also uses excerpts from a research report prepared by another analyst. Bagenot makes only a slight change in wording for these excerpts, but acknowledges the source.
• Sally Wain, who is currently enrolled in the CFA program, is preparing a research report on Manson Telecommunications. She attends a conference in which several investment experts provide their views about the future prospects of this company. Wain cites several quotations from these investment experts in her report without specific reference.

According to CFA Institute Standards of Professional Conduct involving prohibition against plagiarism, which of the following statements is CORRECT?

A) Wain violated the Standards, but Bagenot did not.

B) Both Bagenot and Wain violated the Standards.

C) Bagenot violated the Standards, but Wain did not.

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Bagenot complied with Standard I(C), which permits publishing factual information from Standard & Poor's without acknowledgment and using excerpts with acknowledgment. Wain committed plagiarism because she failed to give specific references for the quotations that she used.

kasinkei

All of the following violate Standard I(C), Misrepresentation, EXCEPT:

A) copying a proprietary computerized spreadsheet without seeking authorization from the creators.

B) presenting factual information published by recognized statistical reporting services without acknowledgment.

C) citing quotes attributable to "investment experts" without specific references.

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Standard I(C), Misrepresentation, permits using recognized sources of factual information such as Standard & Poor’s Corporation and Moody’s Investors Service without acknowledgment.

kasinkei

An analyst preparing a report needs to cite which of the following?

A) A recent quote from the Federal Reserve Chairman.

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

C) The individual who developed a chart from the same firm.

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Statistics provided by a recognized agency, such as Standard and Poor’s, do not need to be cited. Charts, quotes, and algorithms developed by the firm would need to be cited when they are used but the individual(s) who developed the materials within the firm do not need to be cited.

JonnyKay

Sandra Bulow, CFA, is responsible for updating her employing firm’s website to include changes in analysis techniques and trading procedures. She is often very delinquent in making these changes, despite working extensive hours. She is aware clients are using the website to make investment decisions, and has received complaints from the sales department as the information on the website if often different from what is presented in sales meetings. Bulow is most likely:

A) in violation of Standard III(B) "Fair Dealing."

B) not in violation of any Standard.

C) in violation of Standard I(C) "Misrepresentation."

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Bulow is most likely in violation of Standard I(C) "Misrepresentation." The web site information is erroneous, and needs to be updated to match the firm’s current practices.

JonnyKay

Timothy Hooper, CFA, is a security analyst at an investment firm. In his spare time, Hooper serves as a volunteer for City Pride, which collects clothes for the homeless. Hooper has occasionally given some of the clothes to his friends or sold the clothes instead of returning all of the clothing to City Pride. City Pride discovers what he has been doing and dismisses him. Later, City Pride learns that other volunteer organizations have dismissed Hooper for similar actions. Has Hooper violated Standard I(D) on professional misconduct in the CFA Institute Standards of Professional Conduct?

A) No, because Hooper's conduct is unrelated to his professional activities as a security analyst.

B) No, because Hooper volunteers his services to City Pride.

C) Yes.

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Hooper violated Standard I(D) because he repeatedly engaged in conduct that involves dishonest conduct. This violation occurred despite the fact that his offenses do not relate directly to his professional activities. However, Hooper’s conduct reflects poorly on his professional reputation and integrity.

JonnyKay

A CFA charterholder who comes to work intoxicated is:

A) in violation of Standard IV(A) concerning duties to employer.

B) in violation of Standard I(D) concerning professional misconduct.

C) not in violation of the standards.

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Being intoxicated at work is poor personal behavior. It is a violation of Standard I(D), which covers professional competence and integrity.

JonnyKay

All of the following are violations of Standard I(D), Misconduct, EXCEPT:

A) conviction of a misdemeanor involving civil disobedience in support of one’s personal beliefs.

B) conviction of a crime involving fraud.

C) any conduct that undermines confidence that the CFA charter represents a level of achievement based on merit and ethical conduct.

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The Code and Standards do not focus on personal conduct as long as the conduct does not reflect poorly on one’s professional reputation, integrity, or competence.

JonnyKay

A CFA charterholder is caught shoplifting and is sentenced to nine months in prison. Is this a violation of Standard I(D) Misconduct?

A) Yes, because the prison sentence is more than six months.

B) No, because the crime does not relate to the investment profession.

C) Yes, because the crime involved stealing.

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Any act involving lying, cheating, stealing, or other dishonest conduct that reflects adversely on the charterholder’s professional activities is a violation of Standard I(D). Although the crime did not relate to the investment profession, it certainly reflected adversely on the charterholder professionally.

JonnyKay

An analyst belongs to a nationally recognized charitable organization, which requires dues for membership. The analyst has worked out a deal under which he provides money management advice in lieu of paying dues. While performing services for the organization, the analyst discovers some useful computer programs that his predecessor developed and left as the property of the organization. The analyst decides to use the computer programs in his consulting business. This action is:

A) a violation of Standard I(D) concerning misconduct.

B) appropriate since the analyst is technically an employee of the organization.

C) a violation of Standard III(B) concerning fair dealing.

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Since the programs are the property of the organization, the analyst can only use them for the organization. It does not matter whether the analyst is an employee or not. Personal use of the programs without permission from the charitable organization is dishonest and prohibited.