#66 So programmers say everything is fine with a new system. What else are you supposed to do as a supervisor? CFAI wants you to micromanage? #67 What the heck are they talking about. What’s all this “order’s may be executed on a net basis”, “riskless principal trades.” #69-#70 Fine example of a deliberatly missleading question. Too infuriating to even get into.
I agree, v.v.frustrating, I spend 20 minutes stating at this in disbelief, but I am guessing CFAI argumentation for some: #66 You must QA not trust blindly #67 “riskless principal trade” => usually dealers carry inventory and bear risk that the inventory may need to be liquidated at a loss. Whereas in a “riskless principal trade” they only build inventory when a client places and order, i.e. they have a perfectly matched book (of buyses and sellers) “net basis” = you charge a spread to the client over what you acquire it for
Thank you for the post. I was doing these and found difficulty too. Garcia immediately shorts the stock after an analyst issues a sell recommendation. I would assume that he is in breach because he does not do enough research / have enough reasonable basis to do the trade. I do not understand why Q.70 is not B. --> He does not have reasonable basis for the trade. Correct answer is that he is in possession of material non public info… Weird…
charly_blue Wrote: ------------------------------------------------------- > Thank you for the post. I was doing these and > found difficulty too. > > Garcia immediately shorts the stock after an > analyst issues a sell recommendation. > I would assume that he is in breach because he > does not do enough research / have enough > reasonable basis to do the trade. > > I do not understand why Q.70 is not B. --> He does > not have reasonable basis for the trade. > > Correct answer is that he is in possession of > material non public info… Weird… That one was pretty straightforward, he was listening to analyst upgrades/downgrades through the phone. There are plenty that I still don’t understand, but I’ve come to the conclusion if internal policy is stricter than CFA requirements then it follows the C&S. For example, if a firm wants its employees to report ALL additional compensation, whether there is a potential conflict or not, then that’s okay. And if a firm requires you to disclose all gifts, regardless of value, then that is also okay. There was also a question where a client was ill and couldn’t trade, so the client was paying for a service they weren’t taking advantage of. In the eyes of CFAI, there was no violation of communication with client. I would disagree, they should have noticed the decrease in trading volume and contacted the client.
Yes! You are referring to Q.57… Quite tricky… For Q.70, Why is the analyst downgrade or upgrade material non-public information?
charly_blue Wrote: ------------------------------------------------------- > Yes! You are referring to Q.57… Quite tricky… > > For Q.70, Why is the analyst downgrade or upgrade > material non-public information? Because when it becomes public, it will materially affect the stock price. I got this one wrong too… Ethics is pretty damn tricky.
your time might be better served covering other weaker areas than diving deep into the mysteries of one-off WTF questions. i get caught up doing this and have to stop myself. usually not worth your time to drive yourself crazy over deez
I agree - because at the end of the day there is enough grey in these Ethics question that some will be a crap shoot - experience and a practical bent of mind can work to your disadvantage on some of these points.
Where are these questions
CFAI Volume 1, Reading 2, End of chapter problems. There are 82 problems in this reading, and we are talking about the ones near the end.
Do the item sets, the other questions are relatively straightfoward.