GIGAMIND

Folder:
115 CFA
File:
115.010.20 Reading 2 - Code of Ethics and Standards of Professional Conduct

LOS

a. describe the structure of the CFA Institute Professional Conduct Program and the process for the enforcement of the Code and Standards
115.010.20.10 Reading 2 - Code of Ethics - LOS a. CFA institute professional conduct program

b. state the six components of the Code of Ethics and the seven Standards of Professional Conduct
115.010.20.20 Reading 2 - Code of Ethics - LOS b. six components seven standards

c. explain the ethical responsibilities required by the Code and Standards; including the sub-sections of each Standard
115.010.20.30 Reading 2 - Code of Ethics - LOS c. ethical responsibilities

Practice test results

I read this Reading in 2 days. Now taking the practice quiz at the end of the Reading and recording my actual score here.

SCORE = 12/14 (85.7%)

Q   X   1/0
1   B   1
2   C   1
3   C   1
4   A   0
5   B   1   (but C could work too?)
6   B   1   (tricky word play)
7   A   1   (100% memorization)
8   B   1   (process of elimination)
9   A   0   (but B/C are correct for a slightly differently worded Q)
10  C   1
11  B   1   (tricky word play)
12  C   1
13  B   1   (hard choice)
14  C   1

Wrong answers and their correct answers:

  1. As stated in the revised 11th edition, the Standards of Professional Conduct:
    a. require supervisors to focus on the detection and prevention of violations
    b. adopt separate ethical considerations for programs such as CIPM and Investment Foundations
    [c]. address the risks and limitations of recommendations being made to clients.

    (c) is correct because the constant invention of new financial instruments requires a discussion of the risks with clients. (a) is incorrect because the supervisor compliance directive has broader expectations than this.

  2. According to the Duties to Clients standard, suitability requires members and candidates in an advisory relationship with a client to:
    a. place their clients’ interests before their own interests
    [b]. consider investments in the context of the client’s total portfolio
    c. not knowingly make misrepresentations relating to recommendations

    (b) is correct because Standard III.C.1c Suitability says that you must judge the suitability of investments in context of the client's total portfolio. (a) is incorrect because it is a requirement addressed under III.A Loyalty.


Source:
  • CFA