Ethics - Self test..

Alright I took the self test and scored 86%. However I have some problems with these questions here… (yes, i already used the search function, but there is a thread of docmash80, etc, who do not answer all my questions…) #1. Giannini is the head of the research department for an investment management firm. While Giannini is an accomplished analyst, in his current position, he does very little original research on his own. He reviews and revises the reports written by a very capable staff of junior analysts who produce original and insightful work. The firm has a policy that every report distributed to clients includes Giannini’s name and contact information as the head of the department. This policy: A) Misrepresents Giannini’s abilities as a research analyst and the extent of his expertise. B) Violates the Code and Standards. C) Complies with the Code and Standards so long as the report also identifies the analyst who actually did the research and wrote the report. D) Will mislead clients into thinking that Gianni did the research himself. #2. Which of the following statements clearly CONFLICTS with the recommended procedures for compliance presented in the Standards of Practice Handbook? a) Investment recommendations may be changed by an analyst without prior approval of a supervisory analyst. b) Prior approval must be obtained for the personal investment trans¬actions of all employees. c) For confidentiality reasons, personal transactions should not be compared to those of clients or the employer unless requested by regulatory organizations. d) Personal transactions include transactions in securities owned by the employee and members of his or her immediate family and transactions involving securities in which the employee has a beneficial interest. #3. CORRECT under the Code and Standards: I. CFA Institute members exercise reasonable supervision by establishing and implementing written compliance procedures. II. Once compliance procedures are established, CFA Institute members must take reasonable steps to ensure that they are disseminated and enforced. III. Misconduct by a member’s subordinate automatically results in a violation of the Code and Standards by the member for failing to properly supervise the employee. a) I, II, and III. b) II and III. c) I only. d) I and II. #4. 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) May accept the reimbursement for the travel and accommodations because the firm paid for all the analysts and did not show favoritism to Gonzalez. b) 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. c) 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. d) May attend the dinner and participate in the golf tournament and sight-seeing but not accept reimbursement for travel and accommodations. #5. Which of the following is the CORRECT manner for an individual to indicate that they hold the CFA designation? a) “I am a CFA charterholder.” b) “I am a CFA.” c) “I have been awarded a CFA degree by the CFA Institute.” d) “I am a Chartered Financial Analyst.” #7. Which of the following is LEAST LIKELY to be an example of misrepresentation: a) Guaranteeing a specific rate of return on the equity securities of a public company. b) Claiming to have earned an academic degree or professional designation that has not yet been awarded. c) Omitting relevant facts from a research report. d) Plagiarizing the work of another analyst in writing a research report. #8. Ward is scheduled to visit the corporate headquarters of Evans Industries. Ward expects to use the information obtained during the visit to complete his research report on Evans stock. Ward learns that Evans plans to pay all of Ward’s expenses, including costs of meals, hotel room, and air transportation. Which of the following actions by Ward would be the BEST course of action? a) Write the report without taking the trip. b) Pay for all travel expenses, including costs of meals and incidental items. c) Accept the expense-paid trip but disclose the value of the services accepted in the report. d) Accept the expense paid trip and write an objective report.

1C 2D 3B 4B 5A 7D 8B

are you sure about #7? I would’ve thought A.

hey… are these self tests for members only or can candidates also take them?? there was something about crediting 5 hrs to PD if we pass this test… that should apply for members and not candidates right?

Whatever, it lets you take it, it’s free, why not take it?

right… but I just wanted to make sure that this was not a problem with the site … that’s all…

Anyone else have trouble getting a pasword for these? I put in my # and email address. It tells me they are sending my password, but I get nothing. I tried it a couple days ago and again today.

I don’t think so…I’m not a member, and I was able to take it, and I got alot of value out of it, and I recommend it. Unfortunately, if you get an answer wrong, they don’t tell you what the right answer was or why your answer was wrong.

moto - waited 3 days for a password. then registered with another email and it worked.

but still what are your answers? thanks

Taken one at a time, #1 is C, because he’s providing his name and contact info as a courtesy, but he is in no way trying to claim credit for the report, since the analyst who write the report is credited on it. If needed, I’ll give answers on the others, but I need some dinner first.

1C (correct) 2 D 3 D (correct) 4 B 5 A (correct) 7 D 8 B (correct ------- How about these ones… ------- (9) Which of the following is LEAST LIKELY to be considered a “material” piece of information regarding a company: A former CFO of the company predicting long-term decline in the company’s stock. A government report of economic trends affecting a company. Changes in company management. Loss of a customer representing a significant portion of a company’s gross sales. --------- (10) Which one of the following scenarios is MOST LIKELY to be a violation of the Code and Standards: Submitting false expense reimbursement forms. A conviction for possession of drugs. A conviction for drunk driving. Personal bankruptcy ------ Choi is a part of a research team that is collectively responsible for producing investment analysis for his firm’s portfolio managers. The research reports of the group contain all the names of the analysts on the research team. Generally, Choi agrees with the conclusions and recommendations contained in the reports published by the group, but occasionally he holds a minority view. In the report on a particular automotive company, Choi believes prospects for the company are dim while the remainder of the research group are optimistic about the company’s future. The final report recommends that investors buy stock in the company. Choi should: Write his own report and publish it separately. Cooperate with publishing the report but document his difference of opinion with the research team. Inform his supervisors that, unless he dissociates from the report, he will be in violation of the Code and Standards. Insist that his name be removed from the report.

Here are the answers I put and I got most right, only 1 wrong. 1 C 2 B? (I answered A but got it wrong; this seems like a poorly worded question) 3 D 4 B 5 A 7 C 8 B

9 A 10 A Choi Question: answer is B

(11) 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 II. II and III. I and III. I, II, and III.

anali Wrote: ------------------------------------------------------- > (11) 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 II. > II and III. > I and III. > I, II, and III. This answer is A. I’ve noticed on a lot of questions when they use the word “ALL” in an answer it is usually wrong b/c there is always some exception…

(12)Gaines, a financial analyst for Skinner Investment Counseling, is told by the investor relations representative for Firebird Avionics, a major aircraft parts manufacturer, that the firm is in the final stages of building a new fuel efficient jet engine. This information is divulged by Firebird at the most recent quarterly conference call for analysts. Gaines uses this information along with other information he obtained from the company and distributed to the public in a research report that includes a “buy” recommendation for Firebird stock. Which of the following statements is CORRECT: Gaines violated the Code and Standards because he has a material misrepresentation in his report. Gaines violated the Code and Standards because he failed to separate opinion from fact. Gaines violated the Code and Standards because he used material nonpublic information. Gaines’ actions did not violate the Code and Standards. ----- (13)Vidovich received a year-end gift of a set of new golf clubs from a client who was delighted by the performance of her portfolio, managed by Vidovich. Vidovich may do all of the following EXCEPT: Accept the gift, keeping the matter confidential. Decline the gift. Accept the gift and disclose its receipt to his employer. Accept the gift and donate it to charity.

12 D? 13 A As for 12, I put C but got it wrong. I think I read on another post that the answer was D b/c the conference call with Analysts is deemed public disclosure even though I think I’ve read in the Standards that it clearly isn’t. This seems like another weird question.

Thanks so much!! Greatly appreciated.

rbford- I too marked it as material and non public info violation… !! the answer is weird indeed…