Judy Duely, CFA< is an analyst and plans to visit a company that she is analyzing in order to prepare a research report. Standard I.B : A. requires Dudley to pay for all her own expenses and to not accept any gifts or compensation for writing a research report. B. requires Dudley to pay for her own transportation costs, to not accept any gifts or compensation for writing the report, but allows her to accept accommodations and meals that are not lavish. C. requires her not to accept any compensation for writing a reserch report, but allows her to accept company paid transportaiton, lodging, and meals. D. allows her to accept transportation, lodging, expenses, and compensation for writing a research report, but requires that she disclose such an arrangement in her report.
D. What is the official answer? I hear you on the WTF part. A lof of the Ethics material in the CFA books scream “Duh!” but when the questions are presented in this form, they really touch upon gray area…
answers D. i chose B cuz i thot ur supposed to pay for ur transportations and lodging, while others are ok…
you can sin, if you confess seems to be the idea. cfai loves disclosures.
Actually I disagree with the explanation given for the answer. I agree that the answer should be D, but the real reason is that it is the best answer among all the rest. The first three clearly indicate that the Standard IB *requires* (requires is a keyword here) and then mention *not* get *compensation*. Only the last one says that she could be compensated for the research. So ignoring gifts, transportation, etc. I think the real reason we should eliminate the first three is because it looks like standard I(B) is requiring the analyst not be compensated for the research she has done. We all know, that the standard does not say that in any way. It only prohibits IPO participation. In addition, the material clearly talks about issuer-paid research on page 24. Where it allows the analyst to receive compensation as long as the analyst discloses it in the research. I think the above question falls in that category. So the answer should be D. One more point about I(B) that often confuses most folks is that it is OK to get gifts, etc. from Clients (see page 22, para 2) as they could be considered as part of the compensation you are already receiving from the client. But these must be disclosed to the employers. However, gifts from corporations, issuers, brokers, etc. are frowned upon, because they could potentially influence judgement, independence and objectivity.