Colleen O’Neil, CFA, manages a private investment fund with a balanced global investment mandate. Her clients insist that her personal investment portfolio replicate the investments within their portfolio to ensure them that she is willing to put her money at risk. By undertaking which of the following simultaneous investment actions for her own portfolio would O’Neil most likely be in violation of Standard VI(B)–Priority of Transactions?

Which of the following statements related to requirements for the CFA Institute Standards of Professional Conduct Standard V(B)–Communication with Clients and Prospective Clients is least likely accurate? The standard requires members and candidates to:

G&F Advisors claims compliance with the Global Investment Performance Standards (GIPS) in its marketing materials. The compliant presentation includes a footnote which indicates that the firm has been verified by an independent third party. An additional note states that G&F is in compliance with the GIPS standards except for its private equity investments. Is it likely that G&F violated the GIPS standards?

Scott works for a regional brokerage firm. He estimates that Walkton Industries will increase its dividend by US$1.50 a share during the next year. He realizes that this increase is contingent on pending legislation that would, if enacted, give Walkton a substantial tax break. The US representative for Walkton’s home district has told Scott that, although she is lobbying hard for the bill and prospects for its passage are favorable, concern of the US Congress over the federal deficit could cause the tax bill to be voted down. Walkton Industries has not made any statements about a change in dividend policy. Scott writes in his research report, “We expect Walkton’s stock price to rise by at least US$8.00 a share by the end of the year because the dividend will increase by US$1.50 a share. Investors buying the stock at the current time should expect to realize a total return of at least 15% on the stock.” According to the Standards:

Townsend was recently appointed to the board of directors of a youth golf program that is the local chapter of a national not-for-profit organization. The program is beginning a new fund-raising campaign to expand the number of annual scholarships it provides. Townsend believes many of her clients make annual donations to charity. The next week in her regular newsletter to all clients, she includes a small section discussing the fund-raising campaign and her position on the organization’s board.

For firms to claim compliance with the GIPS standards they most likely must:

A CFA Institute member would violate the standard for material nonpublic information by:

The Standards of Practice Handbook provides guidance:

An investment banking department of a brokerage firm often receives material nonpublic information that could have considerable value if used in advising the firm’s brokerage clients. In order to conform to the Code and Standards, which one of the following is the best policy for the brokerage firm?

How does ethical conduct most likely compare with what is legally required?

When Abdullah Younis, CFA, was hired as a portfolio manager at an asset management firm two years ago and was told he could allocate his work hours as he saw fit. At that time, Younis served on the board of three nonpublic golf equipment companies and managed a pooled investment fund for several members of his immediate family. Younis was not compensated for his board service or for managing the pooled fund. Younis’ investment returns attract interest from friends and co-workers who persuade him to include their assets in his investment pool. Younis recently retired from all board responsibilities and now spends more than 80% of his time managing the investment pool for which he charges non-family members a management fee. Younis has never told his employer about any of these activities. To comply with the CFA Institute Standards of Professional Conduct with regards to his business activities over the past two years, Younis would least likely be required to disclose which of the following to his employer?

Which one of the following actions will help to ensure the fair treatment of brokerage firm clients when a new investment recommendation is made?

To comply with the GIPS standards, firms most likely must:

Smith is a financial analyst with XYZ Brokerage Firm. She is preparing a purchase recommendation on JNI Corporation. Which of the following situations is most likely to represent a conflict of interest for Smith that would have to be disclosed?

Which of the following is not a component of the CFA Institute Code of Ethics?

Sheila Schleif, CFA, is an equity analyst at an investment banking division of Mokara Financial Group, a full service financial group. Schleif uses a multi-factor computer model to make stock recommendations for all clients of Mokara. Schleif discovers that the model contains an error. If the error were corrected, her most recent buy recommendation communicated to all clients would change to a sell. Schleif corrects the error, changing the buy to a sell recommendation, and then simultaneously distributes via e-mail the revision to all investment banking clients who received the initial recommendation. A week later, Schleif sells the same shares she held in her personal portfolio. Concerning her actions, Schleif most likely violated which of the following CFA Institute Standards of Professional Conduct?

Brown works for an investment counseling firm. Green, a new client of the firm, is meeting with Brown for the first time. Green used another counseling firm for financial advice for years, but she has switched her account to Brown’s firm. After spending a few minutes getting acquainted, Brown explains to Green that she has discovered a highly undervalued stock that offers large potential gains. She recommends that Green purchase the stock. Brown has committed a violation of the Standards. What should she have done differently?

According to the Fundamentals of Compliance section of the Global Investment Performance Standards, issues that a firm must consider when claiming compliance include all of the following except:

Mailaka Securities (MS) advertises the use of a “bottom up” investment style in its marketing material. Recently, MS senior management decided to switch to a “top down” approach, citing the fact that it is less labor intensive. All other aspects of the research process are to remain the same. The head of research at MS, Mara Cherogony, CFA, is instructed to supervise the implementation of the new procedures, notify clients of the changes, and revise the text of marketing materials when new material is produced. Which of the following CFA Standards pertaining to Investment Analysis, Recommendations, and Actions is Cherogony least likely in danger of violating?

Pietro, president of Local Bank, has hired the bank’s market maker, Vogt, to seek a merger partner. Local is currently not listed on a stock exchange and has not reported that it is seeking strategic alternatives. Vogt has discussed the possibility of a merger with several firms, but they have all decided to wait until after the next period’s financial data are available. The potential buyers believe the results will be worse than the results of prior periods and will allow them to pay less for Local Bank. Pietro wants to increase the likelihood of structuring a merger deal quickly. Which of the following actions would most likely be a violation of the Code and Standards?

Reliable Data Corp offered to pay all the expenses of Lindsey Robinson, CFA, an equity analyst who covers the company, to attend the company’s upcoming annual shareholder meeting. Robinson declined their offer and explained to the company that if she had accepted their offer she would most likely be in violation of:

What is most likely a critical aspect of the Consider phase of an ethical decision-making framework?

According to the Duties to Clients standard, suitability requires members and candidates in an advisory relationship with a client to:

Marc Davidson, CFA, works as a trust specialist for Integrity Financial. On his own time, Davidson starts a part time consulting business providing advice to Trustees for a fee. Since this is only part time work, he doesn't inform Integrity of the consulting business. Davidson asks his assistant to compile a list of Integrity’s clients and their contact information. The following month, Davidson is offered a similar role at Integrity’s largest competitor, Legacy Trust Services, Inc. After he begins working at Legacy, his new manager arranges for him to meet with a number of prospective clients, many of whom are clients of Integrity. After meeting with Davidson, a number of former Integrity clients decide to transfer their business to Legacy. Did Davidson’s action violate the Code and Standards?

Decision makers who use a compliance approach are most likely to:

Florence Zuelekha, CFA, is an equity portfolio manager at Grid Equity Management (GEM), a firm specializing in commodities. Zuelekha, who previously focused on alternative energy, recently attends her first commodity conference, sponsored in large part by GEM. Independent industry experts argued that commodities would increase in value and recommended that investors hold at least 10% of their portfolio assets in commodities based on consistent increases in their values over the previous two years. Without doing any additional research, Zuelekha recommends to all her clients an immediate allocation of 5% of their portfolio into commodities. Over the next few weeks, Zuelekha moves her own portfolio to a 10% commodity allocation. Which of the CFA Standards did Zuelekha most likely violate?

Once an investor chooses a particular course of action, the value forgone from alternative actions is best described as a(n):

Providing information about the performance and financial position of companies so that users can make economic decisions best describes the role of:

If there is a policy rate of 3%, a real trend rate of growth in the underlying economy of 1%, and long-run expected inflation of 3%, then the central bank policy stance operating within a credible inflation-targeting regime is best described as:

Which of the following is most likely to be a characteristic of a Giffen good? Its:

Which of the following is a Type I error?

An executive from Switzerland checked into a hotel room in Spain and was told by the hotel manager that 1 EUR will buy 1.2983 CHF. From the executive’s perspective, an indirect exchange rate quote would be:

From the beginning to the ending years of a decade, the annual value of final goods and services for country X increased from €100 billion to €300 billion. Over that time period, the GDP deflator increased from 111 to 200. Over the decade, real GDP for country X increased by approximately:

A Monte Carlo simulation can be used to:

Which of the following organizations helps to keep global systemic risk under control by preventing contagion in scenarios such as the 2010 Greek sovereign debt crisis?

Which of the following statements is the most appropriate description of gross domestic product (GDP)?

For the positively skewed unimodal distribution, which of the followings is correct

Which of the following events can be represented as a Bernoulli trial?

In contrast to normal distributions, lognormal distributions:

By definition, the probability of any Event E is a number between

A company incurs a capital expenditure that may be amortized over five years for accounting purposes, but over four years for tax purposes. The company will most likely record:

Two events A and B are independent if the probability of occurrence of A:

In a period of declining inventory unit costs and constant or increasing inventory quantities, which inventory method is most likely to result in a higher debt-to-equity ratio?

For a sample size of 65 with a mean of 31 taken from a normally distributed population with a variance of 529, a 99% confidence interval for the population mean will have a lower limit closest to:

Over the past 240 months, an investor’s portfolio had a mean monthly return of 0.79%, with a standard deviation of monthly returns of 1.16%. According to Chebyshev’s inequality, the minimum number of the 240 monthly returns that fall into the range of −0.95% to 2.53% is closest to:

A company’s financial position would best be evaluated using the:

Mustard Seed PLC adheres to IFRS. It recently purchased inventory for €100 million and spent €5 million for storage prior to selling the goods. The amount it charged to inventory expense (€ millions) was closestto:

When testing a hypothesis, the power of a test is best described as the:

The minimum rate of return an investor must receive in order to accept an investment is best described as the:

According to the Heckscher–Ohlin model, when trade opens:

Company A owns 60% of Company B. Company A’s consolidated income statement most likely includes 100% of Company A’s revenues and expenses and what portion of Company B's?

Which of the following best describes a component of the income statement?

Which of the following is the most likely example of a tool of fiscal policy?

The tools used by central banks to implement monetary policy most likely include:

According to IFRS, all of the following pieces of information about property, plant, and equipment must be disclosed in a company’s financial statements and footnotes except for:

Depreciation expense under which of the following methods is least likely affected by the estimate of the useful life of the asset?

With respect to the relationship between output and costs in the short run, a decline in the marginal cost per unit most likely occurs at what level of production?

Interest paid is classified as an operating cash flow under:

Assuming all other factors remain unchanged, which of the following changes would most likely cause a simultaneous increase in the participation ratio and a decrease in the unemployment rate?

In order to minimize the foreign exchange exposure on a euro-denominated receivable due from a German company in 100 days, a British company would most likely initiate a:

Which of the following statements is most accurate? If the covariance of returns between two assets is 0.0023, then:

Which of the following would best explain an increase in receivables turnover?

Which role is a central bank least likely to assume?

Intangible assets with finite useful lives mostly differ from intangible assets with infinite useful lives with respect to accounting treatment of:

An analyst reviewing a firm with a large reported restructuring charge to earnings should:

A profit maximum is least likely to occur when:

Patent fees and legal services are recorded in which of the following balance of payments components?

Which of the following statements best describes a feature of any probability function of a random variable? The probability function:

A company recently engaged in a non-cash transaction that significantly affected its property, plant, and equipment. The transaction is:

At the end of the year, a company revalued its manufacturing facilities, increasing their carrying amount by 12%. There had been no prior downward revaluation of these facilities. The revaluation will most likely cause the company’s:

When screening for potential equity investments based on return on equity, to control risk, an analyst would be most likely to include a criterion that requires:

A country has a comparative advantage in producing a good if:

When computing net cash flow from operating activities using the indirect method, an addition to net income is most likely to occur when there is a:

A cell phone manufacturer has switched to high-margin premium-priced products with the most innovative features as part of its product differentiation strategy. Which of the following other changes is most consistent with this strategy?

Disinflation is best described as a: