Members of CFA Institute and candidates in the CFA Program should maintain and improve their professional competence and strive to maintain and improve the competence of other investment professionals. This is a requirement under:

Group of answer choices

Standard VII(A): Conduct as Members and Candidates in the CFA Program.

Standard I(A): Knowledge of the Law.

The Code of Ethics.

Flag question: Question 2

Question 2

Steve Jackson, CFA, attempts to use enforcement of Standard I(D)Misconduct as a method of settling a personal dispute with a work colleague. Which of the following is most likely to be the result of this misuse of the CFA Institute Professional Conduct Program?

Group of answer choices

Enforcement action by CFA Institute against Jackson's work colleague

No action

Enforcement action by CFA Institute against Jackson

Flag question: Question 3

Question 3

Which of the following actions is least likely to be in violation of Standard II(B): Market Manipulation?

Group of answer choices

Manipulation of model inputs to reflect only negative market scenarios when valuing structured products.

The use of highfrequency trading strategies to take advantage of shortterm perceived market inefficiencies.

The crossing of a small amount of stock in a small-cap company at a price significantly different to the price of the most recent automatically matched trade shortly before the calculation of settlement prices used for option payoff calculations.

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Question 4

Bireli Bennet is a stock market broker in a country where the local laws state that client confidentiality should be maintained at all times. Bennet has a client that he suspects is engaging in illegal activities. According to Statement III(E)Preservation of Confidentiality, the best course of action for Bennet to follow is:

Group of answer choices

Refrain from disclosing any information about his client in line with the requirements of local law.

Report the client to CFA Institute.

Report the potentially illegal behavior to local authorities.

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Question 5

Which of the following situations is least likely to lead to a violation of Standard IV(B): Additional Compensation Arrangements?

Group of answer choices

Full written disclosure is given to the employer prior to receiving any additional compensation.

Verbal disclosure is given to the employer prior to entering into the agreement.

Full written consent is given by the employer prior to entering into the agreement.

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Question 6

Xavier Stephens, CFA, is a research analyst who is preparing a research report concerning a new biotechnology company involved in the development of drugs used to treat diseases of the immune system. In the course of his research, he consults medical experts on the likely success of the drugs being trialed by the company. The experts are very confident that the trials will likely be successful and that the company will go on to sign major contracts with pharmaceutical companies. Stephens includes this information in his research and concludes the following:

Based on the fact that the trials are going to be successful, we initiate coverage on the company with a strong buy rating.

Which of the following Standards is most likely to have been violated by Stephens?

Group of answer choices

Standard V(B): Communication with Clients and Prospective Clients.

Standard II(A): Material Nonpublic Information.

Standard V(A): Diligence and Reasonable Basis.

Flag question: Question 7

Question 7

According to the recommended procedure for compliance with Standard VI(B): Priority of Transactions, firms should:

Group of answer choices

Ban personal investing by investment personnel.

Restrict investment in IPOs and private placements by investment personnel.

Ban client accounts where the client is a family member of an employee.