Exam (elaborations)
CFA LEVEL 1 - ETHICS, PROFESSIONAL STANDARDS, AND GIPS QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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CFA LEVEL 1 - ETHICS, PROFESSIONAL STANDARDS, AND GIPS QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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CFA LEVEL 1 - ETHICS, PROFESSIONALSTANDARDS, AND GIPS QUESTIONS
AND ANSWERS WITH SOLUTIONS 2024
Stakeholders - ANSWER Individuals or groups of individuals who could be affected either directly or
indirectly by a decision (Have a stake in decision)
Ethics - ANSWER A set of moral principles and rules of conduct that provide guidance for our behavior
Moral/ethical principles - ANSWER Beliefs about what is good, acceptable, obligatory, and what is bad,
unacceptable, or forbidden
Do moral/ethical principles pertain to yourself or others? - ANSWER Both
Code of ethics - ANSWER -Written principles
-Groups codification of beliefs about obligatory and forbidden conduct
Standards of conduct - ANSWER Benchmarks for minimally acceptable behavior- clarifies code of ethics
Profession - ANSWER Specialized skills and knowledge who serve others and agree to behave in
accordance w/ a code of ethics
What do most professions emphasize? - ANSWER -Ethical approach
-Importance of good service
-Empathy with the client
What separates professions from tradespeople? - ANSWER -Licensed status and technical standards
-Serve society
How do professions establish trust? - ANSWER 1. Normalize practitioner behavior
,2. Provide a service to society
3. Client focused
4. High entry standards
5. Possess body of expert knowledge
6. Encourage and facilitate continuing education
7. Monitor professional conduct
8 Collegial
9. Recognized oversight bodies
10. Encourage engagement of members
Fiduciary duty/standard - ANSWER Obligation to deliver high standard of care when acting for the
benefit of another party
What is practice analysis? - ANSWER Updating Global Body of Investment Knowledge (GBIK) and
Candidate Body of Knowledge (CBOK)
Situational influences - ANSWER External factors that shape our thinking, decision making, and behavior
What is most likely to make people act unethically? - ANSWER External factors, environmental or cultural
elements
What is the ethical decision making framework? - ANSWER 1. Identify (facts, stakeholders, duties,
conflicts, etc)
2. Consider (influences, actions, guidance)
3. Reflect (was the outcome anticipated)?
Standards of Practice Handbook (Handbook) - ANSWER Provides guidance to people who grapple with
real ethical dilemmas in investment profession
What does The Handbook address? - ANSWER Professional intersection where theory meets practice.
Ethics crosses from abstract to concrete.
, Who is The Handbook intended for? - ANSWER -Global audience
-CFA institute members
-Supervisors and direct/indirect reports determining responsibilities to each other, client, and market
-CFA institute candidates
What does The Handbook connect? - ANSWER Code of Ethics and Standards of Professional Conduct
What is strongly encouraged of members by The Handbook? - ANSWER Discuss w/ supervisors, legal,
and compliance departments the content of the Code and the Standards and the members' general
obligations under such
What changed in the 11th edition of The Handbook? - ANSWER 1. Mission (betterment of society)
2. Capital markets principle (betterment of society)
3. Responsibilities of Supervisors (increased compliance expectations)
4. Communicate w/ clients and prospects (implicit requirement to discuss risks and limitations)
(disclosures change)
5. CIPM Program/CFA Investment Foundations certificate (expands to "participants")
What is the Disciplinary Review Commitee (DRC)? - ANSWER -Responsible for enforcement of the Code
and Standards
-Volunteers, all CFA charterholders
-Reviews decisions of Professional Conduct staff if member/candidate disagrees
What is the Certificate of Investment Performance Measurement (CIPM)? - ANSWER
What is the statement regarding compliancew ith CFA Program for nonmembers and firms? - ANSWER
[Name of party] claims compliance with the CFA Institute Code of Ethics and Standards of Professional
Conduct. This claim has not been verified by CFA institute.
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