Here’s a general question about answering ethics questions on the exam, in particular related to Research Objectivity Standards and Soft-Dollar Standards…
If a question goes like this: “Does company ABC’s [or company ABC’s certain action] comform/comply with the CFA Institute Research Objectivity Standards?”, do we need to consider the RECOMMENDED sections of the standards as well?
In other words, if ABC’s action complies fully with all REQUIRED sections but does NOT satisfy some RECOMMENDED standards, in this case does the company comply with the Standards?
You might be thinking, in that case, the answer would be “Yes, the company IS in compliance”, because a company that conforms with ALL required sections and NO recommmended sections is considered in full compliance with the Standards (whether it be Research Objectivity or Soft-Dollar). This is what I think, too. However, if you think so, then you are wrong!!
Look at the answers to the EOC questions of Reading 4 on page 224 of the curriculum Volume 1. In particular, questions 2 and 3 will better explain what I’m talking about…
– Question 2: Would you choose A? (Well, I would.) But the correct answer is C.
– Question 3: Would you choose “Yes, and Yes”? (I wanna, but it’s not one of the choices…). The correct answer is A.
[See my post below for the full questions.]
Anyone an expert on ethics? This is such a tricky thing and is confusing and bothering me now. I don’t want to go into the exam with perfectly memorized Standards in my head but got misled and ruined by questions like this.
Many thanks for any thoughts!