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Free CFA-Level-I Exam Braindumps (page: 113)

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PDF with 3963 Questions

Standard IV (B.5) is known as ________.

  1. None of these answers
  2. Preservation of Confidentiality
  3. Fair Dealing
  4. Investment Process
  5. Duty to Employer
  6. Interactions with Clients and Prospects
  7. Prohibition against Use of Material Nonpublic Information
  8. Professional Misconduct

Answer(s): B

Explanation:

Standard IV (A) deals with the Investment Process. Standard III (B) deals with Duty to Employer. Standard IV (B.3) deals with Fair Dealing. Standard IV (B) deals with Interactions with Clients and Prospects. Standard V (A) deals with Prohibition against Use of Material Nonpublic Information. Standard IV (B.5) deals with Preservation of Confidentiality. Standard II (B) deals with Professional Misconduct.



Carl Pagan lives in Meesopotamia, where insider trading is not considered a crime. His friend, Ann Dreen, lives in Gondwana, where an investment professional must report any knowledge of criminal activity to the appropriate authorities. The AIMR code of ethics bars insider trading but does not require one to report criminal activity to authorities. With regard to insider trading, Carl must follow ________ and with respect to reporting of criminal activity, Ann must follow ________.

  1. Meesapotamian law; AIMR code
  2. AIMR code; Gondwana law
  3. Meesapotamian law; Gondwana law
  4. AIMR code; AIMR code

Answer(s): B

Explanation:

A member must always abide by the AIMR code, unless the local laws in any given case are stricter, in which case, the stricter standard applies. Standard I.



Which of the following is/are true about insider trading laws?

  1. Corporations cannot discriminate amongst recipients without risking insider trading liability.
    II. Information provided to a group of analysts remains non-public till it is made available to investors in general.
    III. If a member receives inside information that he deems material, the member must disseminate the information to the public as soon as possible and not trade on it to avoid insider trading charges.
  2. I only.
  3. I & II.
  4. I, II & III.
  5. II & III.

Answer(s): B

Explanation:

If a member receives inside information that he deems material, the member must: a. refrain from making decisions based on the information. b. encourage the firm to make the information publicly available. However, because the information is confidential, the member cannot unilaterally choose to broadcast it to the public.
Indeed, he has an obligation not to personally disclose the information to an outsider.



Which of the following can be found in Standard V?

  1. Members shall not participate in any professional conduct involving dishonesty, fraud, deceit, etc.
  2. Members shall deliver a copy of the Code to their employer.
  3. Members shall not misrepresent investment performance.
  4. Members shall exercise diligence and thoroughness in making investment recommendations or in taking investment actions.
  5. Members shall not knowingly participate or assist in any violation of laws, rules, or regulations.

Answer(s): C

Explanation:

Standard V states that members shall not make any statements that misrepresent the investment performance that they or their firms have accomplished or can reasonably be expected to achieve.






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