A. not trade on it because it is material nonpublic information.
B. trade on it, because it is public information.
C. trade on it, because she figured it out by herself.

A. do nothing since there is no breach with the Standards.
B. disassociate himself from the problem and seek legal advice.
C. prepare a written report to the CEO describing the problem.

A. Core makes sure that everybody in the company has a copy of the CFA Institute Code and Standards and a copy of the internal compliance system. He starts organizing special seminars on compliance with CFA Institute requirements.
B. Core starts collecting information and records on the case, as well as interviewing all involved employees. He decides against immediate limitations on their work, to insure the work of the company will continue undisturbed.
C. Core's first goal is to identify all violators.

A. allowed to accept the offer only with written approval from zippy.
B. allowed to accept the offer only with written approval from zippy and from Dragon.
C. not allowed to accept such an offer since it effectively places him in competition with his employer.

A. Hire a full discretionary power or blind trust manager for his portfolio.
B. Diversify his personal portfolio so, in this way, these stocks will no longer represent a substantial portion of the portfolio.
C. Open an account that will be managed by someone else but will allow him to maintain his investment preferences.

A. Standard III(A), Loyalty, Prudence, and Care.
B. Standard V(A), Diligence and Reasonable Basis.
C. Standard I(B), Independence and Objectivity.

A. seek advice from company counsel to determine appropriate action.
B. do nothing because the branch is outside of U.S. jurisdiction.
C. disassociate himself from the case with a written report to his supervisor.

A. Olson should have checked the accuracy of the comments.
B. Olson did not need to check the additional comments.
C. If Olson attributes those comments to the senior analyst, she cannot be held responsible for incorrect information.

A. constitutes a violation of the Standard concerning duty to employer.
B. constitutes a violation of Standard III(D) concerning performance presentation.
C. constitutes a violation of his fundamental responsibilities under the Code and Standards.

A. Obtain prior permission from her employer.
B. Inform her current clients about her outside consulting.
C. Consult only on her free time and do not accept any benefit greater than $100.

A. use outside research only after verifying its accuracy.
B. use only his own research in making investment recommendations, because anything else would violate Standard I(B), Independence and Objectivity.
C. use only his company's research when making investment recommendations and use outside research for reports and analysis on stocks.

A. Accepting research reports from the brokerage firm that do not benefit client portfolios.
B. Exercising a selection principle that does not comply with the idea of best trade price and execution.
C. Lack of action in consulting with the client before choosing the brokerage firm.

A. constitutes a violation of the Standard concerning prohibition against misrepresentation.
B. constitutes professional misconduct but not the use of nonpublic information and is a violation of the Code and Standards.
C. constitutes the use of material nonpublic information and is a violation of the Code and Standards.

A. violate the Standard of Objectivity and Independence.
B. violate the Standards because she trades on inside information.
C. violate the Standard of Fair Dealing.

A. Standard I(C), Misrepresentation, I(B), Independence and Objectivity, and I(A), Knowledge of the Law.
B. Standard I(C), Misrepresentation, only.
C. Standard I(C), Misrepresentation, and I(A), Knowledge of the Law.

A. Using factual information from a recognized financial information agency without acknowledging the source of the information.
B. Improving an existing report and using it inside the company under a new title without acknowledging the source of the original report.
C. Adjusting an already published model and announcing it as a new model without acknowledging the source of the original model.

A. Factor guarantees the portfolio will achieve its goal return.
B. If Williams is not satisfied with the current target return, Johnson can always improve it by increasing his T-bills share.
C. The portfolio securities were carefully selected by Factor to minimize Williams' risk.

A. conduct a thorough investigation of activities.
B. terminate the accounting staff immediately and issue a press release describing the situation.
C. leave the staff in their current jobs and increase supervision while the external auditors complete their work.

A. deal fairly and objectively with all clients and prospects when providing consultation on asset and project valuations.
B. certify annually that they have maintained familiarity with the compliance procedures and agree to abide by them.
C. report, in writing, on a quarterly basis all securities transactions for their personal portfolios and those in which they have a beneficial interest.

A. a violation of the Standard concerning fiduciary duties.
B. not in violation of the Code and Standards.
C. a violation of the Standard concerning use of material nonpublic information.

A.

Correct

Correct

B.

Incorrect

Correct

C.

Incorrect

Incorrect

A. The Code of Ethics is a concise set of general principles that can be used to address questions as they arise, but as a practical matter, ethical decision making is needed to apply the Code to complicated situations.
B. Ethical reasoning is mathematically precise and the technical terms found in the Code of Standards and Standards of Professional Conduct are clear-cut and unambiguous.
C. Once the relevant sections of the Code of Ethics and Standards of Professional Conduct have been identified, the investment professional must determine if the course of action is consistent with the intent, whether the client would agree the action is the best alternative, and whether the firm’s reputation would be enhanced or compromised.

A. Determine whether a fully informed client would likely view the chosen action favorably and if not, choose a different course of action.
B. Assess whether the chosen action would provide an immediate positive economic benefit to the firm and if not, choose a different course of action.
C. Assess whether the general public would perceive the firm more favorably if the situation were to be objectively reported in the media and if not, choose a different course of action.

A. terminate the contract with JMT prior to issuing any research on the company.
B. disclose the arrangement only if he plans to renew the contract in six months.
C. disclose the consulting arrangement to clients considering JMT as an investment.

A. rely on the current compliance system since the subordinate supervisors are subject to the Code and Standards.
B. immediately implement a new compliance system.
C. review the compliance system for its adequacy.

A. violated the Standards by failing to deal fairly with all of Bison Investments’ clients.
B. not violated the Standards since he has reasonable basis to support a strong-buy recommendation.
C. violated the Standards by failing to maintain his independence and objectivity.

A. disclose, in writing, all observed violations of security laws and regulations to the proper regulatory authorities.
B. inform their employer, clients, and potential clients of benefits received for recommending products or services.
C. receive permission from both their employer and outside clients to engage in investment consulting outside the firm.

A. must disclose the terms of the lease arrangement.
B. need not disclose the terms of the lease arrangement because Waters obtained the clients’ permission for the referral.
C. need not disclose the referral fee if Waters discloses the lease arrangement to the clients first.

A. act in a prudent and judicious manner.
B. place the client’s interest before the employer’s interest.
C. support the sponsor's management during proxy fights.

A. providing confidential program information to the public.
B. disregarding the rules related to the administration of the CFA examination.
C. expressing opinions in disagreement with CFA Institute advocacy positions.