Question 1 - 94374 Janine Walker is an individual investment advisor with 200 individual clients. When she first obtains a client, Walker solicits personal data that helps her formulate an investment recommendation, including tax status, income, expenditure needs, and risk tolerance. The Standards: A) require Walker to update the data regularly. B) require updating a client’s data only when a material change occurs to the personal data. C) only require to update a client’s data when a material change is being made to the clients’ portfolio. -------------------------------------------------------------------------------- Question 2 - 86794 While servicing his clients’ accounts, an analyst who is a CFA charterholder, determines that one client is probably involved in illegal activities. According to Standard III(E), Preservation of Confidentiality, the analyst may NOT do which of the following? A) There are no exceptions in this list. B) Contact the appropriate governmental authorities about the determination. C) Contact CFA Institute about the determination. -------------------------------------------------------------------------------- Question 3 - 94931 Julie Stades retired several years ago and relinquished her membership in CFA Institute. She had the CFA designation up until then. She has decided to go back to work and puts the following statement on her resume: “I earned the CFA designation 10 years ago.” Is this a violation of Standard VII(B)? A) No, as long as she does not indicate she currently has the designation. B) Yes, she has used the letters “CFA” in an undignified manner. C) Yes, because she uses “CFA” as a noun. -------------------------------------------------------------------------------- Question 4 - 94673 Which of the following statements about the responsibilities of CFA charterholders is TRUE? CFA charterholders: A) are only obligated to comply with securities laws in the U.S. B) must comply with the laws and rules governing their profession or must not engage in any individual behavior that reflects adversely on the entire profession. C) must comply with the laws and rules governing their profession and must not engage in any individual behavior that reflects adversely on the entire profession. -------------------------------------------------------------------------------- Question 5 - 94698 Timothy Hooper, CFA, is a security analyst at an investment firm. In his spare time, Hooper serves as a volunteer for City Pride, which collects clothes for the homeless. Hooper has occasionally given some of the clothes to his friends or sold the clothes instead of returning all of the clothing to City Pride. City Pride discovers what he has been doing and dismisses him. Later, City Pride learns that other volunteer organizations have dismissed Hooper for similar actions. Has Hooper violated Standard I(D) on professional misconduct in the CFA Institute Standards of Professional Conduct? A) No, because Hooper’s conduct is unrelated to his professional activities as a security analyst. B) No, because Hooper volunteers his services to City Pride. C) Yes. -------------------------------------------------------------------------------- Question 6 - 94834 John Hill, CFA, has been working for Advisors, Inc., for eight years. Hill is about to start his own money management business and has given his two-week notice of his resignation from Advisors. A few days before his resignation takes effect, on his lunch hour, he takes out a loan from a bank on behalf of his new business and uses the money to buy some office equipment for his new business. Since he engaged in these transactions while still an employee of Advisors, Hill violated Standard IV(A), Loyalty to Employer, by: A) engaging in a financial transaction, like taking out a loan, only. B) neither of these actions. C) both taking out the loan and purchasing the office equipment. -------------------------------------------------------------------------------- Question 7 - 93526 Robert Hamilton, a CFA candidate, is preparing a research report on Pets-R-Us for public distribution. Hamilton’s preliminary report contains unfavorable earnings forecasts for the next four quarters. As part of his analysis, Hamilton met with Linda Brisson, the president of Pets-R-Us, and asked her to review the preliminary report for factual inaccuracies. Brisson revised Hamilton’s earnings forecasts so that the quarterly earnings showed an upward trend and resulted in positive earnings by the fourth quarter. Hamilton included the revised earnings figures in his report without further review. Although the final report included the basic characteristics of Pets-R-Us, it emphasized certain areas such as projected quarterly earnings but only briefly touched on others. According to CFA Institute Standards of Professional Conduct on research reports, Hamilton: A) violated the Standard because the report did not give similar attention to all areas but instead emphasized quarterly earnings at the expense of other areas. B) did not violate the Standard. C) violated the Standard because he did not thoroughly review and analyze any information provided by Brisson. -------------------------------------------------------------------------------- Question 8 - 94754 In securing the shares for all accounts under her management, Linda Kammel of Northwest Futures purchased three blocks of shares at three different prices. She then allocated these shares by placing shares from the first block in accounts with surnames beginning with A-G. The second was allocated over accounts H-P, and the third over Q-Z. This action is: A) not permissible under the Code and Standards. B) consistent with her responsibilities under the Code and Standards. C) permissible only if the clients are informed of the allocation procedure. -------------------------------------------------------------------------------- Question 9 - 86914 Liz Davis is a portfolio manager for a firm that claims it is in compliance with CFA Institute Soft Dollar Standards. In purchasing bonds for the account of the pension fund of Richards Company, no commissions were paid but there was a spread charged by the broker between the purchase and sale price of the bonds. The brokerage on the trade is not governed by any securities regulation. The specific brokerage from the trade: A) can be used to benefit another client as long as Davis receives prior consent from Richards. B) cannot be used to benefit any other client. C) can be used to benefit another client as long as Richards benefits from other the client’s brokerage in the future. -------------------------------------------------------------------------------- Question 10 - 86983 Greg Hibbert, CFA, is working with his firm’s compliance department to implement policies and procedures that comply with the requirements of the CFA Institute Research Objectivity Standards (ROS). Hibbert has informed the compliance officer that in order to meet the ROS requirements, the firm must require a written annual update of personal investments held by covered investment personnel or their families, and must provide a list of activities that violate the firm’s policies and the accompanying disciplinary actions to all of the firm’s clients and prospects. Are Hibbert’s statements regarding personal investments and the disclosure of violating activities CORRECT? Personal Investments Violating Activities A) No No B) Yes No C) Yes Yes -------------------------------------------------------------------------------- Question 11 - 94916 Which of the following is a component of the Code of Ethics? CFA Institute members shall: A) strive to maintain and improve their competence and the competence of others in the profession. B) act for the benefit of their clients and place their clients’ interests before their own. C) disclose to their employer all matters that reasonably could be expected to interfere with their duty to their employer or ability to make unbiased and objective recommendations. -------------------------------------------------------------------------------- Question 12 - 94946 Several years ago, Hilton and Ross, a full service investment firm, managed the initial public offering of eCom, Inc. Now, eCom wants Hilton and Ross to underwrite its secondary public offering. A senior manager at Hilton and Ross asked Brent Whitman, CFA, one of its equity analysts, to write a favorable research report on eCom to help make the underwriting a success. Whitman conducted a thorough analysis of eCom and concluded that the company has serious problems, which did not suggest a favorable financial outlook. Nevertheless, Whitman wrote a favorable report, because he was fearful of losing his job. Hilton and Ross publicly distributed the report that only contained: A brief description of the basic characteristics of eCom. A statement that “the stock price will double within six months.” A buy recommendation. Which of the following statements about Whitman’s violation of CFA Institute Standards of Professional Conduct is most correct? Whitman violated: A) Standard V(A), V(B), and I(B). B) Standard V(A), Diligence and Reasonable Basis only. C) Standard I(B), Independence and Objectivity, only. -------------------------------------------------------------------------------- Question 13 - 94531 An analyst provides services for a charitable organization and in return gets free membership in the organization. Part of her job is to manage the liquid assets of the organization, and those assets include stocks. Her supervisor in the organization calls her and tells her to buy a certain stock for the portfolio based upon insider information from a board member in the organization. The analyst objects, but the supervisor says this is what they have always done and sees no reason for changing now. The analyst complies with the request. With respect to Standards IV(A), Loyalty to Employer, and II(A), Material Nonpublic Information, the analyst violated: A) both Standards IV(A) and II(A). B) only Standard II(A) that prohibits insider trading. C) only Standard IV(A) requiring duty of loyalty. -------------------------------------------------------------------------------- Question 14 - 86972 June Bird is a pension consultant asked to advise on the Backwater County Pension Plan. Bird notices that 20 percent of the plan’s assets are invested in privately held local businesses. Bird is concerned about the lack of liquidity and diversification caused by such an investment. She learns that state law allows investing in local businesses and county law requires at least one-fifth of the plan’s assets to be dedicated to investing in local businesses. Bird: A) can continue to advise the pension plan as best she can with the restrictions. B) should file a written complaint to the Department of Labor pointing out that the law is in conflict with the Employee Retirement Income Security Act (ERISA). C) should recommend that the trustees resign or risk being sued for violating the Prudent Expert Rule. -------------------------------------------------------------------------------- Question 15 - 94660 David Saul, CFA, heads the trust department at Savage National Bank. Fairway Enterprises invites Saul to sit on its Board of Directors. In return for his services on the Board, Fairway offers to provide Saul and his family with access to the facilities at Wilmont Country Club at no cost. Saul will not receive any monetary compensation for his services on the Board. According to CFA Institute Standards of Professional Conduct, which of the following actions must Saul take? A) Saul must obtain written consent from all parties to only if he decides to accept the offer to serve on the Board of Directors. B) Saul must disclose in writing to Savage Bank the terms of the offer whether or not he accepts the offer to serve on the Board of Directors. C) Saul must reject the offer to serve on the Board of Directors. -------------------------------------------------------------------------------- Question 16 - 94641 Greg Stiles, CFA, keeps a list of his clients’ birthdays and has personally sent them a birthday card each year at the appropriate time. With respect to this action, which of the following may be a violation of Standard III(E), Preservation of Confidentiality? A) Sending a gift along with the card. B) Hiring a company outside the firm to perform the task. C) The mere act of sending a birthday card each year. -------------------------------------------------------------------------------- Question 17 - 94389 Randal Brooks is the chief economist for a large brokerage firm. In the aftermath of a national tragedy, Brooks feels that it is very possible that the stock market will drop significantly and not recover for several years. However, he does not believe that this is the most likely scenario but merely that the risk of investing in equities has increased. He decides to write a market commentary to the brokerage clients that discusses the reasons why the market will remain stable and talks about why he, as a private citizen, feels patriotic. He does not mention the increase risk in equities. Brooks has: A) violated the Standards by not including all of the relevant factors in the research report, but not by making patriotic statements. B) violated the Standards by not including all of the relevant factors in the research report and making patriotic statements. C) not violated the Standards. -------------------------------------------------------------------------------- Question 18 - 93361 The CFA Institute Standards of Practice Handbook requires CFA Institute members to do all the following EXCEPT: A) receive written permission from both their employer and outside clients to engage in investment consulting outside the firm. B) to disclose in writing to the proper regulatory authority all observed violations of the securities laws and regulations. C) to inform employer, clients, and potential clients of benefits received for recommending products or services. -------------------------------------------------------------------------------- Question 19 - 94922 For an employee with the CFA designation who works for a firm, which of the following is NOT necessary to meet the requirements of the Code and Standards? A) It is recommended that their employer is aware of the Code and Standards. B) Deliver a copy of the Code and Standards to their employer. C) Recommend notifying their employer of their responsibility to follow the Code and Standards. -------------------------------------------------------------------------------- Question 20 - 94371 Standard VI(B), Priority of Transactions, applies to transactions an analyst takes on behalf of: A) his clients. B) both of these. C) his employer.
1.A 2.A 3.A 4.C 5.C 6.B 7.C 8.A 9.B 10.B 11.A 12.A 13.A 14.A 15.A 16.B 17.A 18.B 19.B 20.B
1.B 2.C 3.A 4.C 5.A 6.B 7.C 8.A 9.A 10.B 11.A 12.C 13.B 14.A 15.A 16.B 17.C 18.B 19.B 20.B Forget DJIA, did I hit a bottom here already?
Question 1 - #94374 Your answer: A was correct! According to Standard III©, Suitability, Members and Candidates must reassess client information and update regularly. This question tested from Session 1, Reading 2, LOS a, b. -------------------------------------------------------------------------------- Question 2 - #86794 Your answer: A was correct! Standard III(E) allows an analyst to reveal information about a client to CFA Institute since CFA Institute will keep the information confidential. If the analyst is reasonably certain a law has been violated, an analyst may have an obligation to report the activities to the appropriate authorities. Therefore, none of the listed actions are exceptions from the analyst’s options. This question tested from Session 1, Reading 2-III, LOS E… -------------------------------------------------------------------------------- Question 3 - #94931 Your answer: A was correct! Stades is allowed to state that she earned the designation as long as she does not infer that she currently has the designation. The letters “CFA” are only to be used as an adjective, and she does that. This question tested from Session 1, Reading 2-VII, LOS B… -------------------------------------------------------------------------------- Question 4 - #94673 Your answer: C was correct! CFA charterholders must comply with the laws and rules governing their profession and must not engage in any individual behavior that reflects adversely on the entire profession. While they should act honorably and follow U.S. securities laws, they are obligated to more than that, as set forth in the Code and Standards. This question tested from Session 1, Reading 2-I, LOS A… -------------------------------------------------------------------------------- Question 5 - #94698 Your answer: C was correct! Hooper violated Standard I(D) because he repeatedly engaged in conduct that involves dishonest conduct. This violation occurred despite the fact that his offenses do not relate directly to his professional activities. However, Hooper’s conduct reflects poorly on his professional reputation and integrity. This question tested from Session 1, Reading 2-I, LOS D… -------------------------------------------------------------------------------- Question 6 - #94834 Your answer: B was correct! The Standards of Practice under IV(A) expressly says that a departing employee is “generally free to make arrangements or preparations to go into a competitive business before terminating the relationship with the employee’s employer provided that such preparations do not breach the employee’s duty of loyalty.” Neither of these actions are in conflict with the interests of Advisors, and Hill performed them on his own time. This question tested from Session 1, Reading 2-IV, LOS A… -------------------------------------------------------------------------------- Question 7 - #93526 Your answer: C was correct! Standard V(B) permits Hamilton to ask company management to review his report for factual inaccuracies, but Hamilton should have taken care to thoroughly review and analyze any information provided by the company. Hamilton is not required to give equal emphasis to all areas but can emphasize certain areas, touch briefly on others, and omit certain aspects deemed unimportant. This question tested from Session 1, Reading 2-V, LOS B… -------------------------------------------------------------------------------- Question 8 - #94754 Your answer: A was correct! Standard III(B) requires a member to deal fairly with all clients when taking investment actions. Since she knew at the outset that she was going to place shares in all accounts, regardless of the first letter of the surname, all accounts must participate on a pro-rata basis in each block in order to conform to the Standard. Her actions constitute a violation of the Standard concerning fair dealing. This question tested from Session 1, Reading 2-III, LOS B… -------------------------------------------------------------------------------- Question 9 - #86914 Your answer: B was incorrect. The correct answer was A) can be used to benefit another client as long as Davis receives prior consent from Richards. Prior consent must be given in the case of a principal trade. This question tested from Session 1, Reading 3, LOS b. -------------------------------------------------------------------------------- Question 10 - #86983 Your answer: B was incorrect. The correct answer was A) No No Neither of Hibbert’s recommendations to his compliance officer are specific requirements of the ROS. They are recommended policies designed to achieve compliance. While the ROS requires a firm claiming compliance to “manage covered employee’s’ personal investments and trading activities’ effectively”, there is no specific requirement related to reporting personal holdings. In addition, firms claiming compliance with the ROS are not explicitly required to disclose to clients and prospects activities that are violations and the resulting punishment for such activities. It is recommended, however, that firms disclose this information to clients and prospects. This question tested from Session 1, Reading 4, LOS b. -------------------------------------------------------------------------------- Question 11 - #94916 Your answer: A was correct! Striving to maintain and improve their competence and the competence of others in the profession is one of the components of the Code of Ethics, whereas the other statements are part of the Standards of Professional Conduct. This question tested from Session 1, Reading 1, LOS a, (Part 1). -------------------------------------------------------------------------------- Question 12 - #94946 Your answer: A was correct! Whitman violated Standard V(A) because he did not have a reasonable and adequate basis for issuing a favorable recommendation. He violated Standard V(B) because he did not distinguish between fact and opinion in his research. The statement that “the stock price will double within six months” is an opinion, not a fact. Whitman violated Standard I(B) because he did not act independently in issuing his recommendation but instead was influenced by senior management at Hilton and Ross. This question tested from Session 1, Reading 2-V, LOS A… -------------------------------------------------------------------------------- Question 13 - #94531 Your answer: A was incorrect. The correct answer was B) only Standard II(A) that prohibits insider trading. An employee/employer relationship does not necessarily mean monetary compensation for services. Complying with the request is a violation of II(A) which prohibits trading on insider information. Standard IV(A) Loyalty deals with going into business for yourself, leaving an employer and continuing to act in the employer’s best interest until their resignation becomes effective, and whistleblowing which means that the member’s interests and their firm’s interests are secondary to protecting the integrity of capital markets and the interests of the clients. This question tested from Session 1, Reading 2-II, LOS A… -------------------------------------------------------------------------------- Question 14 - #86972 Your answer: A was correct! According to Standard III(A), Loyalty, Prudence, and Care, Bird can continue to serve as a consultant to the plan, but must follow the applicable law. This question tested from Session 1, Reading 2, LOS a, b. -------------------------------------------------------------------------------- Question 15 - #94660 Your answer: A was correct! Standard IV(B) requires that members obtain written consent from all parties involved before accepting monetary compensation or other benefits that they receive for their services that are in addition to compensation or benefits conferred by a member’s employer. In this situation, Saul may also be obligated to disclose his participation on Fairway’s Board to clients, prospective clients, and employer under Standard VI(A), Disclosure of Conflicts. This question tested from Session 1, Reading 2-IV, LOS B… -------------------------------------------------------------------------------- Question 16 - #94641 Your answer: B was correct! According to Standard III(E), an analyst should limit the number of persons who have access to clients’ personal information. Allowing a company outside the firm to send birthday cards could be a violation. Sending a birthday card is not a violation, nor is sending a gift of reasonable value. This question tested from Session 1, Reading 2-III, LOS E… -------------------------------------------------------------------------------- Question 17 - #94389 Your answer: A was correct! By not mentioning the increased risk of the market, Brooks has violated the Standard on using reasonable judgment in a research report. However, the patriotic statements do not violate the Standards. This question tested from Session 1, Reading 2, LOS a, b. -------------------------------------------------------------------------------- Question 18 - #93361 Your answer: B was correct! Members are not required to report violations of others to regulatory authorities, either verbally or in writing, but such reporting may be prudent. This question tested from Session 1, Reading 2-I, LOS A… -------------------------------------------------------------------------------- Question 19 - #94922 Your answer: B was correct! It is no longer required but recommended that CFA members and candidates notify their employer that they are required to follow the Code and Standards. This question tested from Session 1, Reading 2-I, LOS A… -------------------------------------------------------------------------------- Question 20 - #94371 Your answer: B was correct! Standard VI(B) addresses the treatment of both these accounts. The accounts of clients and employers have priority over personal accounts. This question tested from Session 1, Reading 2-VI, LOS B…
- A 2. B 3. A 4. C 5. C 6. B 7. C 8. A 9. B 10. B 11. A 12. A 13. B 14. A 15. B 16. B 17. A 18. B 19. B 20. B
Incorrect: Q1, Q2, Q5, Q10, Q12, Q17 14/20 = 70% = Just passed by the skin of my teeth
got 4 wrong and a few were guesses… still not very good and these havent even changed from last level… need to review more because this is one section i can actually understand if i study it…
I thought this thread was going to be about pints of ale. On that note, my roomate brewed a fresh batch of ale and it should be ready this weekend - 5 gallons of beer. Nice!!