Ethics Ques

Simple one for all you early wakers and the last one before doze off… An analyst, who is a CFA Institute member, manages a high-grade bond mutual fund. This is his only professional responsibility. When the analyst comes across a speculative stock investment that he feels is a good investment for his personal portfolio, the analyst: A) may not invest in the stock because of his position as a portfolio manager. B) may invest in the stock because the analyst would not purchase the stock for the bond portfolio he manages. C) is in violation of Standard IV(A), Loyalty to Employer, by spending time analyzing stocks when he should only analyze bonds. D) must notify his supervisor about the stock according to Standard VI(B), Priority of Transactions, to see if it is appropriate for the portfolio that he manages



B - although I agree the sneaky b#^@% was probably analyzing this on company time

although i’ll be taking L2 in June 2009 and havent begun studying yet, this sounds like B for sure.


i would’ve picked C but now I see that it is B.


Correct Ans is B. I chose Priority of Transactions :frowning:

doesn’t he have to make sure the equity fund isn’t currently bidding for the stock. and in real world, you often have to get approval before you buy personally, but i can’t remember how that ties into cfa stuff.

B. IF his company does not manage any other funds or accounts that might be trading or about to trade in the stock (in which case he would have to make sure to give clients priority). Unfortunately this is a typical question where you have to make heroic assumptions, such as of course no other reasons he couldn’t invest - not on restricted list, not in possession of inside info, etc., etc. And of course they don’t state any of that so you sort of have to guess what they’re driving at. Any firm that doesn’t require him to check is probably in violation of standards. Unless maybe they only trade bonds and have a policy that stocks don’t need prior notification/approval.

Very mch B. Nothing stops him from buying stocks considering he is a bonds specialist!.. Im feeling very Olympic for this exam…