CoE and SoPC

A code of ethics:

• is a personal view of acceptable behavior

• Encompasses current "best practices"

• Specifies a minimum level of acceptable consequences

Compared to complying with laws and regulations, complying with a code of ethics:

• is considered a lower standard

• often involves more judgment

• includes compliance with all laws and regulations

Situational factors that influence ethical behavior are least likely to include:

• social pressure

• large financial rewards

• a lack of ethical principles

A professional code of conduct:

• can increase public trust in a profession

• guarantees that members will adhere to a minimum level of ethical conduct

• includes standards that provide guidance for specific behaviors

What should members and candidates do if they face a conflict between applicable laws and the Code of Ethics?

• Comply with the less strict law

• Comply with the more strict law, rule, or regulation

• Ignore the conflict

• Follow the Code of Ethics only

Answer explanation

Members and candidates should comply with the more strict law, rule, or regulation when facing a conflict with the Code of Ethics. This ensures adherence to higher standards of conduct.

What are CFA Institute members and candidates encouraged to do regarding their responsibility to abide by the Code and Standards?

• Ignore it if it conflicts with local laws

• Notify their employer of this responsibility

• Only follow it during exams

• Use it as a guideline, not a rule

Answer explanation

CFA Institute members and candidates are encouraged to notify their employer of their responsibility to abide by the Code and Standards, ensuring transparency and adherence to ethical practices in their professional conduct.

What must members and candidates do when they possess material nonpublic information?

• Share it with their clients

• Act on it immediately

• Not act or cause others to act on the information

• Disclose it to the media

Answer explanation

Members and candidates must not act or cause others to act on material nonpublic information to prevent insider trading and ensure market integrity. This is crucial for maintaining ethical standards in finance.

What is required when communicating investment performance information?

• It must be exaggerated to attract clients

• It must be fair, accurate, and complete

• It must be simplified for easy understanding

• It must be kept confidential

Answer explanation

When communicating investment performance information, it is essential that the information is fair, accurate, and complete to ensure transparency and trust with clients. Exaggeration or simplification can mislead.

What must members and candidates do to maintain independence and objectivity?

• Use reasonable care and judgment

• Follow orders without question

• Disregard external influences

• Accept gifts from clients

Answer explanation

To maintain independence and objectivity, members and candidates must use reasonable care and judgment. This ensures they make informed decisions and avoid biases, unlike following orders blindly or accepting gifts, which can compromise integrity.

What is the responsibility of members and candidates regarding misrepresentation?

• They must not knowingly make any misrepresentations

• They should exaggerate to impress clients

• They can misrepresent if it is unintentional

• They can make misrepresentations if it benefits the client

Answer explanation

Members and candidates must not knowingly make any misrepresentations, as integrity and honesty are essential in maintaining trust and professionalism in their field.