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Free CFA-Level-I Exam Braindumps (page: 55)

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Which of the following statements is NOT correct ?

  1. All of these statements are correct.
  2. Standards II through V contain principles guiding the general activities of members.
  3. Members who work in a country where the Code and Standards impose a higher degree of responsibility than local laws and regulations must adhere to the Code and Standards.
  4. Members are not required to report legal violations to the appropriate governmental or regulatory organizations.
  5. Members who work in a country where the Code and Standards impose a lesser degree of responsibility than local laws and regulations must adhere to the local laws and regulations.

Answer(s): B

Explanation:

Standards II through V address specific conduct, while Standard I contains principles guiding the general activities of members. This distinction should be noted.



Which of the following statements is true?

  1. Standard I sets forth minimum standards relating to general activities.
  2. All of these statements are correct.
  3. Members are to be aware of laws and regulations of foreign jurisdictions.
  4. Standards II through V address specific conduct.
  5. Members who work in a country where the Code and Standards impose a lesser degree of responsibility than local laws and regulations must adhere to the local laws and regulations.
  6. Members are to comply with the laws and regulations of foreign jurisdictions.

Answer(s): B

Explanation:

All the statements are true. Standard I contains principles that apply to the general activities of members while Standards II-V address specific conduct. In addition to complying with the requirements of the Code and Standards, members must be aware of laws and regulations of foreign jurisdictions. When the Code and Standards impose a higher degree of responsibility than applicable securities laws, members must adhere to the Code and Standards and vice-versa.



An employee has a duty of ________ to his current employer, even if he has already disclosed plans to leave within the near future.

  1. loyalty
  2. judgment
  3. none of these answers
  4. sagacity
  5. prudence

Answer(s): A

Explanation:

Standard III (B) states that a departing employee is free to make preparations to go into a competitive business before terminating the relationship with the employee's current employer provided that such preparations do not breach the employee's duty of loyalty.



When complying with Standard IV (B.3) - Fair Dealing, a change of recommendation from "sell" to "buy" is considered:

  1. none of these answers.
  2. material only if so specified prior to the recommendation by the client.
  3. not material.
  4. material only if so specified prior to the recommendation by the investment manager.
  5. generally material.

Answer(s): E

Explanation:

In general, a material change in a firm's recommendation is one that could be expected to affect the investor's judgment or motivate an informed buyer or seller to take an investment action. Hence, a change of recommendation from "sell" to "buy" is generally material.






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