CFA Sample Exam #2 Possible Mistake...

Check Question #5, 2009 CFA L2 Sample 2… To me, the written answer assumes Choice C would be the right answer… But they wrote B as the appropriate answer… What do you think?

post the question

Can’t… Don’t have it in a word file… And considering the length of the question, I’m not really interested in retyping it…

it is a play on words… Standard: The Standards also state that research analysts are prohibited from directly or indirectly promising a subject company or other issuer a favorable report or specific price target, or from threatening to change reports, recommendations, or price targets. What they give in the question: 2. In their relationships with corporate issuers, analysts are prohibited from either directly or indirectly promising favorable reports or specific price targets or threatening negative reports.

Natali’s supervisor was so pleased with her work on the Soft Dollar project that the following week, he had another project for her. He sent her a memo asking if the following firm policies need to be updated to comply with the CFA Institute Research Objectivity Standards: 1. Base compensation for analysts is based on the quality of research performed. Year-end bonuses may be adjusted based on an analyst’s work with investment banking and corporate finance teams. 2. In their relationships with corporate issuers, analysts are prohibited from either directly or indirectly promising favorable reports or specific price targets or threatening negative reports. 3. In their relationships with corporate issuers, analysts are prohibited from sharing with or communicating to a subject company, prior to publication, any section of a research report. In response to Natali’s supervisor’s question regarding the firm’s policies on research objectivity, Natali’s best response would be: Select exactly 1 answer(s) from the following: A. both policies 1 and 2 are consistent with the current Standards. B. both policies 1 and 2 are inconsistent with the current Standards and require changes. C. the policy on analyst compensation requires changes, but the policy regarding relationships with corporate issuers is consistent with current Standards.

We have been over this one about half a dozen times… They want you to know the rule word for word… Its a BS question and you have to accept it and move on… CFAI will do that to you, cant let them stop you from moving forward in your studies. The question says at the end “or threatening negative reports” The rule says that analyst are prohibited from “threatening to change reports”…

This is ridiculous… We’re not studying to become lawyers…

B

wow this one just got me too… i had to search AF to find an explanation for THE explanation… sick