Question 32 of 67

The "mosaic theory" holds that a member:

A. Violates the CFA Institute Code of Ethics and Standards of Professional Conduct if the member fails to have knowledge of and comply with all applicable laws.

B. Can use material public information or nonmaterial nonpublic information in the member's analysis otherwise obtained only through insider information.

C. Should include all available and relevant information in a research report in support of an investment recommendation.

Question 35 of 67

To undertake independent practice for an outside entity apart from fulfilling their duties to their regular employer, members must secure written permission from:

A. Their employer only.

B. The outside entity only.

C. Both their employer and the outside entity.

Question 36 of 67

Tom is part of a team researching Ultimate Mining Co. In completing the report, Tom comes to a different conclusion from the team as to the recommendation of the firm. The team determines both outcomes are reasonable based on the information available and decides to stay with the recommendation that differs from Tom. Which of the following should Tom do to avoid violating the codes and standards?

A. He should issue a secondary report or appendix stating these alternative findings.

B. He can allow his name to appear as part of the team on the report, as there is a reasonable basis for the recommendation.

C. He should not allow his name to appear as part of the team as that would be a misrepresentation of his findings.

Question 38 of 67

Vincent, a trustee for the pension plan of Ivy Industries, has just received a commission schedule from Beckett Brothers Brokerage, a firm he is not currently using for trades. The fee schedule is lower than that charged by Atkins Brokerage, the firm Vincent currently uses for most transactions. Atkins also provides research data and performance measurement for the pension plan, services which Beckett is not equipped to handle. Vincent is concerned that he may be violating his fiduciary duty by not using the lowest cost brokerage firm. Which one of the following statements is true?

A. Vincent will violate his fiduciary duty unless he begins trading through Beckett.

B. Vincent will not violate his fiduciary duty unless he personally profits from his relationship with Atkins.

C. Vincent can continue to trade through Atkins if he determines that the value of the services offered by the brokerage firm is commensurate with the cost.