Which of the following statements is a recommendation of the Standards of Practice Handbook with regard to personal investing? 1. Restrictions on participation in an IPO of equity or equity-related securities. 2. Disclosure of all holdings in which the employee has a beneficial interest. 3. All of the above. 4. Pre-clearance of all trades. McFiggen, an analyst, has written a report for Braveheart Investment Research, recommending investors purchase the securities of a new printing services company. McFiggen owns a significant portion of the company’s stock and Braveheart is a large customer of the company. At the bottom of the research report, in a footnote, McFiggen makes the following disclosure, “The author of this report may or may not have a financial stake in the company and Braveheart Investment Research may have outside business relationship with the company that is the subject of this report.” Which of the following statements is CORRECT: 1. The disclosure related to McFiggen’s conflict of interest is adequate but the disclosure related to Braveheart’s conflict of interest is inadequate. 2. The disclosure related to Braveheart’s conflict of interest is adequate but the disclosure related to McFiggen’s conflict of interest is inadequate. 3. The disclosure is inadequate as it is not made in a prominent manner and with sufficient specificity to effectively communicate the conflict of interest to clients and prospective clients. 4. The disclosure is adequate because it alerts readers to the conflicts of interests of McFiggen and his employer with respect to the printing company. When changing employers or starting another company, which of the following statements regarding the responsibilities of CFA Institute members is/are CORRECT: I. Departing employees are free to make arrangements or preparations to go into competitive business before terminating their relationship with their employer. II. Departing employees have a duty to act in their employer’s best interests until their resignations become effective. III. Departing employees may solicit their employer’s clients for the new venture prior to cessation of employment. 1. I only. 2. II only. 3. I and II. 4. II and III If a CFA Institute member believes that the activity of his or her co-workers is unethical or in violation of the Code and Standards, the member should: I. Confront the person engaging in the unethical conduct. II. Attempt to stop the behavior by bringing it to the attention of their employer. III. Dissociate from behavior by resigning, if necessary. 1. I only. 2. I and II. 3. II only. 4. I, II and III. Youn is a successful money manager who is confident of her investment management ability and claims in her marketing brochures that her clients “will obtain a significant return on principle” by following her advice. Youn’s statement: 1 States an opinion and therefore cannot be a misrepresentation. 2 Misrepresents her ability as an investment manager. 3 Improperly implies a guaranteed investment return. 4 Is not a misrepresentation if all her past clients made money on their investments with her. I got it all wrong when I answered the following: 1. 2 2. 2 3. 2 4. 3 5. 1 Cheers.
I will go for: 3. All of the above. 3. The disclosure is inadequate as it is not made in a prominent manner and with sufficient specificity to effectively communicate the conflict of interest to clients and prospective clients. 3. I and II. 4. I, II and III. 3 Improperly implies a guaranteed investment return. Aby other ideas?
3 3 3 4 3?
Q1. 3 Q2. 3 Q3. 4 Q4. 2 Q5. 3
Q1. 3 Q2. 3 Q3. 3 Q4. 4 Q5. 3 agree with cpk
3 3 3 4 3
I also got: 3 3 3 4 3
I think we have a consensus, am pretty sure you guys are right. looked at it second time, makes sense to follow suit. Q1. 3 bcos 1&2 are correct Q2. 3 bcos diclosure wasnt exactly clear and precise Q3. 3 bcos preparation to go into isnt necessarily soliciting employer’s client which would be a voilation Q4. 4 cos its ethical to confront, excalate and if necessary dissociate by resigning Q5. 3 cannot guarantee investment returns - “…can go up as well as down”
Answer is: 1 It’s not a requirement to stay away from IPO and Private Placements, but it’s just a recommendation to avoid participating in them since they could cause conflict of interest. All the others are a sure requirements… Answer is: 3 Thought disclosing was a good deed, but he did not disclose it in a clear and lucid way. Words like ‘may or may not have’ do not send a clear signal to the readers/ investors of the conspiracy Answer is: 3 Statements I (is true…. but he needs to get a written No-Objection-Certificate from his present employer and the preparation should not take away too much of his time, else he would be depriving his employer of his skills and time) Statements II (is true) Statement III is false. Answer is: 4 I, II and III are all correct in that order… But I still feel there should be a IIa (below) to add to the completeness of the standard. IIa. Monitor the activities of the convict after confronting him his ethical misconduct and commanding him to stop the unethical behavior Answer is: 3 Youn, is trying to gurantee an investment return, in a way…. So he has breached his ethical duty. Final List of answers 1 3 3 4 3 Lemme know if I am correct ??? - Dinesh S
Dinesh – Q1 – is not exactly CFAI style – because in the actual exam you would never find a “All of the above” answer – this is definitely a QBank question. Since there is an All the above - and you are saying 2 and 4 are requirements, I believe 3 would be the right choice there… CP
cpk123 Wrote: ------------------------------------------------------- > Dinesh – Q1 – is not exactly CFAI style – > because in the actual exam you would never find a > “All of the above” answer – this is definitely a > QBank question. > > Since there is an All the above - and you are > saying 2 and 4 are requirements, I believe 3 would > be the right choice there… > > CP cpk123, Here’s what I thought… 1. Restrictions on participation in an IPO of equity or equity-related securities. ----------- Is a RECOMMENDATION only, It’s probably not a REQUIREMENT 2. Disclosure of all holdings in which the employee has a beneficial interest. ------------ Is a REQUIREMENT as per the Standards 3. All of the above. ------------ Forget this option 4. Pre-clearance of all trades. — Is a REQUIREMENT as per the Standards and ther question asks which of the following is a RECOMMENDATION, So I felt the answer is 1 This sure is not a CFAI kind question… maparam, could you provide us with the answers to these? - Dinesh S
Folks, I don’t have the correct answers either. BTW, I got all these questions from the CFA Institute self-test. Click the following link to try it urself. http://webapp2.aimr.org/aimr/Register.asp?SESSION=1056824018437627
I got a 38/49 right on the above paper. I can post the questions I got wrong, and we can compare answers on those… if any one’s interested. CP
Go ahead cpk. I got 40/49 right. The 9 qs. I got wrong r all listed under the two previous posts. Cheers.
Question 43 of 49 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 attend the dinner and participate in the golf tournament and sight-seeing but not accept reimbursement for travel and accommodations. B. May accept the reimbursement for the travel and accommodations because the firm paid for all the analysts and did not show favoritism to Gonzalez. 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. 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. ________________________________________ Question 38 of 49 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. Complies with the Code and Standards so long as the report also identifies the analyst who actually did the research and wrote the report. B. Will mislead clients into thinking that Gianni did the research himself. C. Misrepresents Giannini’s abilities as a research analyst and the extent of his expertise. D. Violates the Code and Standards. ________________________________________ Question 32 of 49 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. A. II and III. B. I, II, and III. C. I and II. D. I and III. ________________________________________ Question 33 of 49 Which of the following is LEAST LIKELY to be an example of misrepresentation: A. Plagiarizing the work of another analyst in writing a research report. B. Guaranteeing a specific rate of return on the equity securities of a public company. C. Claiming to have earned an academic degree or professional designation that has not yet been awarded. D. Omitting relevant facts from a research report. ________________________________________ Question 34 of 49 Members must keep information about current, former, and prospective clients confidential unless: A. The information concerns illegal activities on the part of the client. B. The client or prospective client permits disclosure. C. All of the above. D. Disclosure of the information is required by law. Question 30 of 49 All of the following statements about a CFA Institute members’ record keeping responsibilities are true EXCEPT: A. Records created by an employee as part of her professional activities are generally the property of the employer. B. Records can be maintained either in hard copy or electronic form. C. Only records relating to investment recommendations and actions must be kept. D. In the absence of regulatory guidance, records should be kept for at least seven years. ________________________________________ Question 28 of 49 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: A. Gaines’ actions did not violate the Code and Standards. B. Gaines violated the Code and Standards because he used material nonpublic information. C. Gaines violated the Code and Standards because he has a material misrepresentation in his report. D. Gaines violated the Code and Standards because he failed to separate opinion from fact. ________________________________________ Question 24 of 49 Dudley has been hired by Carson Industries to manage its pension fund. Dudley’s fiduciary duty is owed to: A. Each of the above equally. B. The shareholders of Carson. C. The management of Carson. D. The participants and beneficiaries of Carson’s pension plan. ________________________________________ Question 16 of 49 Sheramy, a portfolio manager for Woodbridge Investment handles the account of Zamborino, a client of the firm. Zamborino offers to pay Sheramy a $100,000 bonus over and above her compensation from Woodbridge Investments if Sheramy achieves an 18 percent annual return for Zamborino’s account. Sheramy: A. Cannot accept this offer because it will interfere with her independence and ability to be objective regarding investment decisions and recommendations. B. Can accept this offer and disclose the bonus to her employer only if she actually achieves the performance target and receives the gift. C. Cannot accept this offer because it is outside of her primary employment relationship with Woodbridge Investments. D. Can accept this offer as long as she discloses the arrangement to her employer. ________________________________________ Question 11 of 49 When changing employers or starting another company, which of the following statements regarding the responsibilities of CFA Institute members is/are CORRECT: I. Departing employees are free to make arrangements or preparations to go into competitive business before terminating their relationship with their employer. II. Departing employees have a duty to act in their employer’s best interests until their resignations become effective. III. Departing employees may solicit their employer’s clients for the new venture prior to cessation of employment. A. I and II. B. II only. C. I only. D. II and III. ________________________________________ Question 8 of 49 When a corporate issuer, seeking to increase their visibility with potential investors, hires an analyst to write research on their company, the analyst must do all of the following EXCEPT: A. Disclose in the report that the analyst is being paid by the company to write the report. B. Allow the company that paid for the report to review the analysis and recommendations. C. Engage in thorough, independent and unbiased analysis of the company. D. Strictly limit the type of compensation received by the company so that the compensation is not based on the content or recommendation contained in the report. ________________________________________
cpk, I now choose the following answers: A A C D C C A D D A B
Which were the one’s you got right among these ? Do you have the answers for those?
all the right ones. Q 8. B Q 16. D Q 24. D Q 28. A Q 30. C Q 34. C