Chap 1.1 (done)

Which of the following is a CORRECT statement of a member's duty under the Code and Standards?

• In the absence of specific applicable law or other regulatory requirements, the Code and Standards govern the member's actions.

• A member who trades securities in a foreign securities market where no applicable local laws or stock exchange rules regulate the use of material nonpublic information may take investment action based on this information.

• A member is required to comply only with applicable local laws, rules, regulations, or customs even though the CFA Institute Code and Standards may impose a higher degree of responsibility or a higher duty on the member.

Which of the following is NOT expressly prohibited by Standard I(C), Misrepresentation?

• misrepresenting a member's academic or professional credentials.

• misrepresenting the services a member is capable of performing.

• providing information on guaranteed investment products.

A CFA charterholder who comes to work intoxicated is:

• not in violation of the standards.

• in violation of Standard I(D) concerning professional misconduct.

• in violation of Standard IV(A) concerning duties to employer.

Sometimes a CFA Institute member simply feels a law has been violated by his firm, and sometimes the member knows a law has been violated. Which of the following pairs of guidelines is CORRECT with respect to the first step a member should take in each case? The member should first contact:

• the firm's counsel if he feels a law has been violated and contact his supervisor if he knows a law has been violated.

• the firm's counsel if he feels a law has been violated and the SEC if he knows a law has been violated.

• his supervisor in the firm if he feels a law has been violated and contact the firm's counsel if he knows a law has been violated.

In order to comply with the CFA Institute Standards, an analyst should:

• use outside research only after verifying its accuracy.

• use only his own research in making investment recommendations, because anything else would violate Standard I(B), Independence and Objectivity.

• use only his company's research when making investment recommendations and use outside research for reports and analysis on stocks.

Nicholas Brynne, CFA, is a fixed-income analyst who trades in mortgage-backed securities (MBS). The MBS industry has seen sweeping regulatory changes since Brynne took his current position, and he now feels his understanding of applicable laws and regulatory standards is dated. Brynne must:

• rely on his firm's policies and procedures for guidance on legal and regulatory standards.

• have all trades reviewed by his compliance department until he has obtained an expert level of knowledge in compliance.

• update his understanding of applicable laws and regulatory standards relating to his position.

• Her actions are a violation of the standard concerning misrepresentation, because she promised something she knew the firm could not deliver.

• Her actions are a violation of the Standards only if prosecution results in a felony conviction.

• Her actions are a violation of the standard concerning professional misconduct because she deceived her clients.

CFA Institute believes:

• that a maximum level of professional responsibility and conduct dictates that members be aware of and comply with laws, rules, and regulations governing their conduct.

• that a minimum level of professional responsibility and conduct dictates that members be aware of and comply with laws, rules, and regulations governing their conduct.

• that firms should comply with all domestic laws and regulations and that these laws also govern behavior in foreign markets, regardless of foreign laws and requirements.

Based on CFA Institute Standards of Professional Conduct, which of the following statements is a violation of Standard I(C), Misrepresentation?

• A young trainee bond trader tells a prospective client that she can assist the client in all the client's investment needs: equity, fixed income, and derivatives and based on her years of experience as an analyst in the business that an investment looks like it has lots of potential.

• A broker says XYZ stock is very likely to double in value over the next six months.

• An investment manager recommends to a prospective client an investment in GNMA bonds because they are guaranteed by the federal government.

Jamie Pyles, a portfolio management trainee for a money management firm, is trying to create a client base. He phones prospective clients, telling them that he is a portfolio manager. He informs prospective clients that based on the last five years of performance of his firm, he can guarantee the client at least a 75% return. He informs them that his firm can provide all of the services that they will ever need. What is the minimum number of misrepresentations Jamie has made to the prospective clients in violation of Standard I(C), Misrepresentation?

• 2.

• 5.

• 3.