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CMT Level 2 - C Q's Questions & Answers 2023
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CMT Level 2 - C Q's Questions & Answers 2023
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CMT Level 2 - C Q's Questions & Answers 2023Which of the following is a component of the Code of Ethics? CFA Institute members shall:
a) use particular care in determining applicable fiduciary duty.
b) use reasonable care and exercise independent professional judgment.
c) maintain and improve the competence of other investment professionals.
d) practice and encourage others to practice in a professional and an ethical manner. - ANSWER-d. practice and encourage others to practice in a professional and an ethical manner. Reference: CFA Institute Code of Ethics and Standards
Allen Johnson, CMT, is working in the Singapore office of German Investment Corporation. From an informal conversation, Allen learns that the company's most recent annual report contains misappropriated information. No one at the Singapore office expresses concern, however, because there
has been no breach of Singapore's law. Barrett should:
a) do nothing because the branch is outside of German jurisdiction.
b) seek advice from the company counsel to determine appropriate action.
c) do nothing because the branch is outside of Singapore's jurisdiction.
d) disassociate himself from the case with a written report to his supervisor. - ANSWER-b. seek advice from the company counsel to determine appropriate action. Reference: CFA Institute Code of Ethics and Standards
Which one of the following most accurately describes the CFA Institute Standard about using material nonpublic information?
a) An analyst cannot use nonmaterial nonpublic information.
b) An analyst may use material nonpublic information as long as it is for his personal use.
c) An analyst may use material nonpublic information if it is legal in his country to do so.
d) An analyst may use nonmaterial nonpublic information as long as it has been developed
under the Mosaic Theory. - ANSWER-d. An analyst may use nonmaterial nonpublic information as long as
it has been developed under the Mosaic Theory. Reference: CFA Institute Code of Ethics and Standards
Adam Green, a portfolio manager, is making a presentation to a prospective client. Green says that as a new portfolio manager, he made an average annual rate of return of 40% in the last two years at his previous firm and that based on this, he can guarantee a 40% return to the client. Which of the following
statements is in accordance with Standard III(D), Performance Presentation?
a) Implying that he can guarantee a return.
b) Stating his past performance as long as it is fact.
c) Imputing his past performance to future performance.
d) Implying that he can guarantee a return based on just 2 years of performance. - ANSWER-b. Stating his
past performance as long as it is fact. Reference: CFA Institute Code of Ethics and Standards
Kai Wong, CFA, is concerned about the activities of several of his coworkers and feels legal violations are routinely overlooked. According to the Code and Standards, a recommended first step would least likely be to:
a) take legal counsel
b) contact industry regulators
c) provide her supervisor with a copy of the Code and Standards.
d) review the company's policies and procedures for reporting ethical violations. - ANSWER-b. contact industry regulators
Reference: CFA Institute Code of Ethics and Standards
An analyst has several groups of clients who are categorized according to their specific needs. Compared to research reports distributed to all of the clients, reports for a specific group:
a) will definitely include more basic facts.
b) may generally exclude more basic facts.
c) cannot be selectively distributed.
d) will not be allowed because it violates the Standard III(B), Fair Dealing. - ANSWER-b. may generally exclude more basic facts.
Reference: CFA Institute Code of Ethics and Standards Steve Smith, CFA, is an equity research analyst for a long-term investment fund. His annual bonus is linked to annual trading profits. Under a new policy, the assessment period is switched to a monthly assessment period. According to the Code and Standards, best practices dictate:
a) keeping the policy change within the firm.
b) keeping the policy change within the firm and existing clients.
c) updating disclosures when the policy change is implemented.
d) requiring Smith to obtain permission from each client prior to implementation of the new
policy. - ANSWER-c. updating disclosures when the policy change is implemented.
Reference: CFA Institute Code of Ethics and Standards
Which of the following actions would be a violation of the Standard VII(A) Conduct as Participants in CFA Institute Programs?
a) Exaggerating the implications of holding the CFA designation.
b) Misrepresenting information on the Professional Conduct Statement.
c) Participating in a civil disobedience movement to oppose a government action.
d) Using the CFA designation without submitting a Professional Conduct Statement and
paying annual dues. - ANSWER-b. Misrepresenting information on the Professional Conduct Statement.
Reference: CFA Institute Code of Ethics and Standards
Paul Jones is a chemical industry research analyst for a large brokerage company. That industry is currently seeing an increase in mergers and acquisitions. While flying through Chicago, Jones sees several senior officers who she knows are from the largest and fourth largest chemical companies walk into a conference room. She concludes that negotiations for an acquisition might be taking place. Jones:
a) may not act or cause others to act on this information.
b) may not act but advise others to act on this information.
c) may use this information to support an investment recommendation.
d) should inform her compliance officer that she has material nonpublic information on firms
she covers. - ANSWER-c. may use this information to support an investment recommendation. Reference: CFA Institute Code of Ethics and Standards
In a meeting with his firm's senior research analyst, George Powel, a proponent of the CFA Institute Research Objectivity Standards (ROS), stated that the key objective of the ROS is to create voluntary reporting of research practices that promote independent and objective research to CFA Institute on an annual basis. With regard to his statements about the objectives of the ROS.
a) he is correct.
b) he is incorrect.
c) He is correct about the voluntary reporting aspect.
d) He is correct about the independent and objective research aspect. - ANSWER-b. he is incorrect.
Reference: CFA Institute Code of Ethics and Standards
___________ is used for comparing the long-term performance of one system against another.
a) Beta
b) Sharpe Ratio
c) Calmar ratio
d) Treynor Ratio - ANSWER-c. Calmar ratio
Reference: MTA, CMT Level II Curriculum (2016), Chapter 46
Beta measures:
a) the relation between a portfolio's return and market return.
b) the relation between a portfolio's volatility and market volatility.
c) how much an individual stock's return is related to the market return.
d) how much an individual stock's volatility is related to the market volatility. - ANSWER-c. how much an individual stock's return is related to the market return. Reference: MTA, CMT Level II Curriculum (2016), Chapter 11
When using the RSI as an overbought/oversold indicator, a sell signal is generated when:
a) RSI declines below its lower reference line and then rallies above it.
b) RSI rises above its upper reference line and then crosses below it.
c) RSI crosses beneath the midpoint (50 level).
d) RSI crosses above the midpoint (50 level). - ANSWER-b. RSI rises above its upper reference line and then crosses below it.
Reference: MTA, CMT Level II Curriculum (2016), Chapter 28
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