Ethics Questions From CFAI 2006 Exam

  1. Question 4 - What exactly is the difference in “making a market” and “participation in the selling group for the public offering of stock” And how is one a violation and one not. 2. Question 7- Got this wrong as he made recommendation based on 4 mths of research. (Tricky dickies) Well is there anything in the reading which states a minimum amount of research time required?

Question 4 Participation in the selling group will be public info right now as the co is involved in the selling. This need not be disclosed as the audience is expected to be aware of this info. Market maker definition - A broker-dealer firm that accepts the risk of holding a certain number of shares of a particular security in order to facilitate trading in that security Thus the dealer may still have possession of stock and this needs to be disclosed. Question 7: No there is no min amount of time mentioned, but think about it - would you base your reasoning on something that is supported by only 4 months worth of data, when you can potentially look at 5 or 10 years or more worth data… this is only an inference - given the fact that this is auto industry stock returns vs labor costs data, you will probalby have access to 5 or 10 yrs worth data.