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ETHICS, ETHICAL AND PROFESSIONAL STANDARDS QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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ETHICS, ETHICAL AND PROFESSIONAL STANDARDS QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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ETHICS, ETHICAL AND PROFESSIONALSTANDARDS QUESTIONS AND
ANSWERS WITH SOLUTIONS 2024
Code of Ethics - ANSWER Act with integrity, competence, diligence, respect, and in an ethical manner
with the public, clients, prospective clients, employers, employees, colleagues in the investment
profession, and other participants in the global capital markets.
Place the integrity of the investment profession and the interests of clients above their own personal
interests.
Use reasonable care and exercise independent professional judgment when conducting investment
analysis, making investment recommendations, taking investment actions, and engaging in other
professional activities.
Practice and encourage others to practice in a professional and ethical manner that will reflect credit on
themselves and the profession.
Promote the integrity and viability of the global capital markets for the ultimate benefit of society.
Maintain and improve their professional competence and strive to maintain and improve the
competence of other investment professionals.
Seven Standards of Professional Conduct - ANSWER I. Professionalism
II. Integrity of Capital Markets
III. Duties to Clients
IV. Duties to Employers
V. Investment Analysis, Recommendations and Actions
VI. Conflicts of Interests
VII. Responsibilities as a CFA Institute Member or CFA Candidate
Standard of Professional Conduct I. Professionalism - ANSWER A. Knowledge of the Law
,B. Independence and Objectivity
C. Misrepresentation
D. Misconduct
Standard of Professional Conduct II. Integrity of Capital Markets - ANSWER A. Material Nonpublic
Information
B. Market Manipulation
Standard of Professional Conduct III. Duties to Clients - ANSWER A. Loyalty, Prudence, and Care
B. Fair Dealing
C. Suitability;
- 1. advisory relationship
- 2. managing portfolio
D. Performance Presentation
E. Preservation of Confidentiality (+ exceptions)
Standard of Professional Conduct IV. Duties to Employers - ANSWER A. Loyalty
B. Additional Compensation Agreements
C. Responsibilities of Supervisors
Standard of Professional Conduct V. Investment Analysis, Recommendations and Actions - ANSWER A.
Diligence and Reasonable Basis
B. Communication with Clients and Prospective Clients
C. Record Retention
Standard of Professional Conduct VI. Conflicts of Interests - ANSWER A. Disclosure of Conflicts
B. Priority of Transactions
C. Referral Fees
, Standard of Professional ConductVII. Responsibilities as a CFA Institute Member or CFA Candidate -
ANSWER A. Conduct as Participants in CFA Institute Programs
B. Reference to CFA Institute, the CFA designation, and the CFA Program
Standard I(A) Knowledge of the Law - ANSWER - Relationship between the Code and Standards and
Applicable Law (follow most strict law)
- Participation in or Association with Violations by Others (knowingly, report)
- Investment Products and Applicable
Recommendations Members:
- Stay informed
- Review procedures
- Maintain current files
- Legal counsel
- Dissociating from a violation (report)
Recommendations Firms:
- Develop and/or adopt a code of ethics
- Provide information on applicable laws
- Establish procedures for reporting violations
Standard I(B) Independence and Objectivity - ANSWER Standard:
- Use reasonable care, judgment to achieve and maintain independence in professional activities
- Do not offer, solicit, or accept any compensation, gift, benefit that could compromise independence or
objectivity
Guidance:
- Gifts are acceptable if disclosed
- Buy-side; Distinguish between gifts from clients and gifts from entities trying to influence a member's
behaviour
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