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1. Phil Jones, CFA, has just finished researching Alpha One Inc. and is about to issue an
report on the company
c ompany.. His manager does not want him to state any adverse opinions a
One, as it could adversely affect their firm’s relations with the company, which is an im
investment
investment banking client. Which of the following actions by the manager most likely
Standard I (B): Independence and Objectivity?
A. Putting Alpha One
One on a restricted list
B. Asking Jones to issue
issue a favorable report
C. Asking Jones to only state
state facts about the
the company
Answer: B
According to Standard I (B), if a firm is unwilling to allow dissemination of adverse o
about a corporate client, it may put the company on a restricted list. This would ensure
firm only disseminates factual information about the company.
2. Which of the following is least likely a violation of Standard I (D): Misconduct?
A. Engaging in frequent fights on the trading
trading floor
B. Offering higher-quality services to certain clients
C. Getting intoxicated during office hours
Answer: B
Offering premium levels of service to certain
ce rtain clients (without disclosing these premium
and making them available to all clients) is a violation of Standard III (B): Fair Dealin
Standard I (D): Misconduct.
3. Martha Stevens, CFA
CFA,, is an inv
investment
estment manager who uses her friend, Robert James, e
for her clients’ brokerage transactions. James provides better services than other broke
for a slightly higher price, which Stevens believes is justified. Which of the following
is most accurate?
A. Stevens is in violation
violation of Standard
Standard III (A): Loyalty
Loyalty,, Prudence and Care.
B. Stevens is in violation of Standard III (B): Fair Dealing.
C. Stevens has not violated any standard.
Answer: C
Stevens is justified in using James as a broker, as the slightly higher charges are justifi
better service.
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