The following information assumes that the CFA Institute Code of Ethics and Standards are applicable.

1.Angela Merton is based in London and works covering the London market for her Hong Kong based employer. She is invited to a meeting with the top 20 shareholders of a biotechnology company to meet with the management team. During that meeting the finance director mentions that the company will expect its workforce to go on strike next week, which will halt manufacturing and distribution of products. Can Merton use this information to update her analyst forecast on the company from a "buy" to a "sell"?

A.Yes, as she was invited to the meeting and told by company management.

B.No, because she must first determine if the information is public knowledge.

C.Yes, as there are other people in the room so the information is public.

Standard: _____________________

2.Which of the following statements is most accurate? Investment professionals have a special responsibility to act ethically because:

A.They are entrusted to protect clients' assets.

B.The profession requires compliance with its code of ethics.

C.The industry is heavily regulated.

Standard: _____________________

3.Benjamin Butler, an investment adviser, has two clients: Larry King, 60 years old, and Gabriel Lanai, 40 years old. Both clients earn roughly the same salary, but King has a much higher risk tolerance because he has a large asset base. King is willing to invest part of his assets very aggressively; Lanai wants only to achieve a steady rate of return with low volatility to pay for his children's education. Butler recommends investing 20 percent of both portfolios in zero- yield, small-cap, high-technology equity issues. Did Benjamin's statements to King and Lanai violate the CFA Institute Code and Standards?

A.Only in King's case did Butler violate the Code and Standards.

B.Only in Lanai's case did Butler Violate the Code and Standards.

C.Neither statement violated the Code and Standards.

Standard: _____________________

4.The mosaic theory holds that an analyst:

A.Violates the Code and Standards if the analyst fails to have knowledge of and comply with applicable laws.

B.Can use material public information and nonmaterial nonpublic information in the analyst's analysis.

C.Should use all available and relevant information in support of an investment recommendation.

Standard: _____________________