Could someone please assist with the below ethics questions (from the CFAi online test). unfortunately they don’t display the correct answer!: 1. Which of the following statements regarding research reports is/are CORRECT according to the Standards of Practice Handbook? I. Members should outline known limitations of their analysis. II. Reports should be supported by background and supporting information, and this information should be available to interested parties. III. Members must include all relevant factors in research reports. a) I and II. b) I, II, and III. (this was wrong?) c) I and III. d) II and III. 2. As part of his responsibilities as a research analyst, Gonzalez, along with several other analysts, takes a tour of the corporate headquarters and meets with management of a large electronics company in Asia. The company pays for the travel and accommodations of all the analysts participating in the 2- day tour and hosts a dinner, a golf tournament, and a sightseeing excursion for them as part of the trip. Under these circumstances, Gonzalez: A)May attend the dinner and participate in the golf tournament and sightseeing but not accept reimbursement for travel and accommodations. (this was wrong?) B)Should not accept reimbursement for his travel and accommodation expenses and should not attend the dinner or participate in the golf tournament as doing so may impinge on Gonzalez’s independence and objectivity. C) May attend the dinner and participate in the golf-tournament and sightseeing excursion because Gonzalez considers these modest “perks” acceptable in the normal course of business. D) May accept the reimbursement for the travel and accommodations because the firm paid for all the analysts and did not show favoritism to Gonzalez. 3. Sheramy, a portfolio manager for Woodbridge Investment handles the account of Zamborino, a client of the firm. Zamborino offers to pay Sheramy a $100,000 bonus over and above her compensation from Woodbridge Investments if Sheramy achieves an 18 percent annual return for Zamborino’s account. Sheramy: a)Can accept this offer and disclose the bonus to her employer only if she actually achieves the performance target and receives the gift. b) Cannot accept this offer because it will interfere with her independence and ability to be objective regarding investment decisions and recommendations. (I had this but its wrong?) c) Cannot accept this offer because it is outside of her primary employment relationship with Woodbridge Investments. d) Can accept this offer as long as she discloses the arrangement to her employer. Thanks!
#1: another pitfall, but where does it say members should outline known limitations of their analysis? I think this is confused with risk or explaining strategies etc… So D is the answer-II and III are explicit in the standards #2: answer is B-thik of this if a journalist tries to stain his image he will find nothing to pin against him and he will go to the next participant-do not come close to indipendence. Firm pays. See last sentence “as doing so may impinge on Gonzalez’s independence and objectivity” #3: D-Standard IV (B) Additional compansation arrangements: direct application!!! Even though it says “obtain written consent from all parties involved” Moral of the story is it should be in the open - no under he table deals with her client.
> #3: D-Standard IV (B) Additional compansation > arrangements: direct application!!! Even though it > says “obtain written consent from all parties > involved” Moral of the story is it should be in > the open - no under he table deals with her > client. thanks rh. i still dont get no.3 though. surely this violates independence and objectivity. anyone? (B) Independence and Objectivity Members and Candidates must use reasonable care and judgment to achieve and maintain independence and objectivity in their professional activities. Members and Candidates must not offer, solicit, or accept any gift, benefit, compensation, or consideration that reasonably could be expected to compromise their own or another’s independence and objectivity.
yes but this gift is from a client not firm that an analyst is researhing. you can accept additional compensation as long as you disclose it to employer. Do not confuse gift from client and gift from others such as firms and you an analyst is covering becuase it will affect your objectivity.
and by the way, how did you end up with those questions, i thought we are not allowed to have them.
Though I agree with RH on 1 and 2. On 3) I think it should be D. 3) The compensation should not interfere with indendpendance and obj because here the analyst is just receiving comp for her performance. Only guidance in this case is that the “Supervisor” needs to make sure that the analyst is not “favoring” to serve high paying clients better.
you receive a printout of all of the questions at the completion of the test.
Is number 2 for sure B. It seems like I ran across a question like this in QBank and, since they did not show favoritism, it should be okay for the analyst to accept the reimbursement for everything. I don’t remember though.
Yeah, I’m not sure about 2. I think C can also be okay…
I don’t ever recall the online practice exams giving you the option to print out the questions… and I’ve taken them for the past two years…
answer is A
it doesn’t give u a print out of the questions only the answers with LOS’s and explanations.
For question one. Communication with clients and prospective clients: Members should (a) notify clients and prospective clients when detailed information exists “capsule” format presentation, (b) support such presentations with readily available reference material highlighting any changes in methodology, and © identify any known limitations of the analysis
It may be violation to put these (CFAI mock / sample) questions here … Can anybody confirm this ?
it def is
It says it in big bold letters before entering into the test
This is not from the CFAI sample exams or mock exams - they are from the CFAI Ethics self-test that you can take as part of continuing professional credit.
yup not a violation … they came from that CFAI ethics self test website…
oh okay, where can u find those tests? You have to for those?
#1 ans is A - you can omit some stuff from your research reoprt # 2 ans is B #3 ans is D they give you the answers with the questions right after the test http://www.cfainstitute.org/centre/codes/ethics/self_exam.html