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: 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. B: May attend the dinner and participate in the golf tournament and sight-seeing but not accept reimbursement for travel and accommodations. C: May accept the reimbursement for the travel and accommodations because the firm paid for all the analysts and did not show favoritism to Gonzalez. D: May attend the dinner and participate in the golf-tournament and sight-seeing excursion because Gonzalez considers these modest “perks” acceptable in the normal course of business. I answered B, not sure which one is right
Another: 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. I and III. I and II. II and III. I, II, and III. I said D. Which one is right?
1 A 2 B
So members do NOT need to include all relevant factors in a research report? And wouldn’t skipping a dinner and golf potentially harm your ability to get valuable data about the firm for your clients?
Smarshy, where did you get these questions from? Do you have the answers?
I was thinking the same thing and had ans the same as you on the test. But got them wrong. Someone else posted these ans
A because, there is no option where he can disclose this information to his employer, so he’s better off not accepting it A because A research report does not necessarily need to be attached with supported information. just my opinion…what are the correct answers?
Lola, I took a self-test i found here. http://www.cfainstitute.org/memresources/pdprogram/ser.html
I don’t know the correct answer, the ridiculous test I took only told me I got it wrong.
1 A The electonics factory does not appear to be in an obscure location, so no chartered flights are required, so the analyst can pay for his own travel/expenses. I also don’t think he should attend the dinner, golf, or sightseeing, as they are not “business only” and could be classified as “lavish/irrelevant hospitality” (i found Schweser Bk1, bottom of pg 16 useful). Smarshy: I think you’ll collect all the valuable data on the tour; dinner and golf is probably classed as getting to know TOO much non-public valuable 2 C I don’t think the Standards state that we should acknowledge our limitations (i.e. I am rubbish at financial statement analysis), so would consider statement I. The other ones look ok
- A Neither golf nor dinner is necessary to better understanding the company. Also, the text is pretty clear that paying for your own travel and lodging is the preferred treatment. 2. C I don’t recall seeing anything about outlining limitations of one’s analysis as a requirement. However, keeping records of your supporting work is a requirement (the solution doesn’t say it has to be attached, just available) and included relevant factors in your analysis/rec at least skirts the “reasonable and adequate basis” language. I’m leary of words like “all”, “always”, and “never” though, which III has.
I took the self-test, and chose May attend the dinner and participate in the golf tournament and sight-seeing but not accept reimbursement for travel and accommodations. and got wrong. So I guess it should be accept it since the firm didn’t show favoritism to Gonzalez? For the second one, I chose B, only the first two right, and it was correct.
In real life, you play golf, you go sightseeing, and you pay for the whole thing.
for the second question, you have to include all the relevant and important ones, not every relevant factor
the first one is C. I chose the non-favoritism one and that was wrong, so I think we have eliminated all of them except for C.