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Test Prep CFA-Level-I Exam Questions
CFA® Level I Chartered Financial Analyst (Page 38 )

Updated On: 28-Feb-2026
Page 38 of 793
PDF with 3963 Questions

By blindly adopting the ideas and works of others without acknowledgment, you have definitely violated Standard ________. You also may have violated Standard ________ because you may be making recommendations without a reasonable basis.

  1. II (A); IV (1)
  2. II (A); IV (1)
  3. II (A); IV (A.2)
  4. II (C); IV (B.2)
  5. II (C); IV (A.2)
  6. II (C); IV (B.1)
  7. II (C); IV (A.1)
  8. II (A); IV (B.2)

Answer(s): G

Explanation:

This is explicitly stated under Standard II (C) - Prohibition against Plagiarism.



In reference to AIMR-PPS, which of the following is/are true?

  1. If the valuation of an investment asset is not based on current market value, it should not be included in total assets to which PPS are being applied.
    II. Composites cannot not be presented as being in compliance unless all the firm'squalifying portfolios are accounted for in at least one composite defined according tosimilar strategy or investment objective.
    III. A subsidiary may claim to be in compliance with the PPS even if the parent firm is not.
  2. I, II and III
  3. I and III only
  4. II and III only
  5. II only

Answer(s): A

Explanation:

Assets to which AIMR-PPS cannot be applied are not to be considered while considering compliance. For example, investment instruments like the GIC whose valuation is not based on market conditions, must be excluded.



Standard III (A) states that members notify their ________ of the Code and Standards. This notification must be

done ________.

  1. nearest Society secretary; within 45 days of candidacy
  2. immediate supervisor; in writing
  3. nearest Society secretary; orally or in writing
  4. chief operating officer (or equivalent); in writing
  5. chief operating officer (or equivalent); orally or in writing
  6. immediate supervisor; orally or in writing
  7. immediate supervisor; within 45 days of candidacy
  8. any of these answers is acceptable; as long as the notification is made

Answer(s): B

Explanation:

Standard III (A): Relationship with and Responsibilities to the Employer, states that: "Members shall inform their employer, in writing, through their direct supervisor, that they are obligated to comply with the Codes and Standards and are subject to disciplinary sanctions for violations thereof."



Level I verification requires independent attestation that the requirements of the AIMR-PPS have been met on a (n) ________ basis.

  1. international
  2. nationwide
  3. firmwide
  4. attainable

Answer(s): C

Explanation:

This is a requirement under Level I verification procedures.



Arditti manages the pension plan for a publicly traded firm, Eros Computers and in this capacity, has the right to vote 0.5% of the common shares outstanding. Recently, Eros wanted to expand its production operations into Latin America and the board had decided to put the matter for open vote from shareholders. Arditti was on vacation in Fiji at the time and when she was informed about the vote, instructed that the portfolio proxy votes be voted along the same lines as that favored by the senior management. Arditti herself has not studied the merits of the proposed expansion plan but has complete faith in the senior management of Eros, which has always proven to be conscientious and prudent. Arditti has

  1. violated Standard IV (B.1) - Fiduciary Duties by voting the proxy shares in an indiscriminate manner.
    II. can be held liable for failing in her duties under ERIS
    III. violated Standard II (B) - Professional Misconduct by behaving in an unprofessional manner.
  2. I and II
  3. I, II and III
  4. I only
  5. II and III only

Answer(s): A

Explanation:

Corporate pension plan managers are governed by ERISA (Employee Retirement Security Act, 1974). One of the fiduciary duties expected under these guidelines is the voting of proxy shares. A fiduciary who fails to vote the proxy votes, votes them without analysis, or votes them blindly with the management on non-routine decisions will be in violation of ERISA. They can be held liable for trust violation unless there are explicit provisions in the plan which preclude the manager from voting. Note, however, that Arditti's voting does not constitute professional misconduct. Standard II (B) - Professional Misconduct - and Standard IV (B.1) - Fiduciary Duties.



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