Mary Hiller, CFA, is a senior analyst at a mutual fund. She is also a member of the Board of the Directors of her daughters Skating Club. She is often asked for advice about the management of the club budget and about possible short-term investments, but she is not paid for this advice. She does not undertake any research to answer these questions, providing information based only on the general practices of the mutual fund at that moment. The only benefit she receives is a free monthly membership for her daughter that would usually cost $182. What should she do before making any recommendations, in order to comply with the CFA Institute requirements? A) Inform her current clients about her outside consulting. B) Obtain prior permission from her employer. C) Discontinue her membership in the Board of the Directors at the Skating Club. D) Consult only on her free time and do not accept any benefit greater than $100. Greg Allen is a security analyst and visits David Dawson, the Chief Financial Officer of Edmonds Company. Dawson reveals a great deal of nonmaterial financial data to Allen, data that Dawson routinely reveals to all security analysts who visit him. From this data and other industry information, Allen conjectures that Edmonds is likely to make a tender offer for another company in the industry, a fact that if true would be considered material to the value of the company. Allen: A) should send a copy of the report to Dawson for verification before disseminating the report to clients. B) must not disseminate the information or use it for trading purposes until the tender offer is announced. C) can publish his conclusion in a research report. D) can trade in the stock, but must not publish the information until the tender offer is announced.
B and B
The statement to notice in the second question is “a fact that if true would be considered material to the value of the company” Other statements may mislead us to think that the question is about the Mosaic theory. I also think the answer is B & B
Answer is B and C. Nonmaterial Nonpublic remember. Nonmaterial financial data and and other industry information, Allen conjectures that Edmonds is likely to make a tender offer for another company in the industry. Therefore this is mosaic since bits of data created the material conclusion.
B & C. It is Mosaic theory.
Great learning opportunity for me
B & C mosaic theory
“Dawson reveals a great deal of nonmaterial financial data to Allen” I think the key to the second problem is the information is nonmaterial…so material non-public information is not being passed on…
Yes. II is C. Mosaic theory and the nose.
I say B for the first and C for the second question