MCQ Vol. 6 LM1 Flashcards
P1
Benchmarks for minimally acceptable behaviors of community members are:
A. a code of ethics.
B. laws and regulations.
C. standards of conduct.
C is correct.
Standards of conduct are applied to specific communities or societal
groups and identify specific behaviors required of community members. These standards of conduct serve as benchmarks for the minimally acceptable behavior of community members. Codes of ethics serve as a general guide for how community members should act; they communicate the organization’s values and overall expectations regarding member behavior, but they do not identify specific behaviors required of community members. Laws and regulations are rules of conduct defined by governments and related entities about obligatory
and forbidden conduct broadly applicable for individuals and entities under their jurisdiction.
P2
Specialized knowledge and skills, a commitment to serve others, and a shared code of ethics best characterize a(n):
A. vocation.
B. profession.
C. occupation.
B.
P3
When unethical behavior erodes trust in an investment firm, that firm is more-likely to experience:
A. lower revenues only.
B. higher expenses only.
C. lower revenues and higher expenses.
C.
P4
High ethical standards are distinguishing features of which of the following bodies?
A. Craft guilds
B. Trade bodies
C. Professional bodies
C.
P5
Fiduciary duty is a standard most likely to be upheld by members of a(n):
A. employer.
B. profession.
C. not-for-profit body.
B.
P6
Which of the following best identifies an internal trait that may lead to poor ethical decision making?
A. Overconfidence
B. Loyalty to employer
C. Promise of money or prestige
A.
Situational influences in decision making will most likely be minimized if:
A. strong compliance programs are in place.
B. longer-term consequences are considered.
C. individuals believe they are truthful and honest.
B.
P8
Decision makers who use a compliance approach are most likely to:
A. avoid situational influences.
B. oversimplify decision making.
C. consider more factors than when using an ethical decision-making
approach.
B.
P9
To maintain trust, the investment management profession must be interdependent with:
A. regulators.
B. employers.
C. investment firms.
C is correct.
The investment management profession and investment firms must
be interdependent to maintain trust. Employers and regulators have their own standards and practices, which may differ from regulations and standards set by professional bodies.
P10
Which is an example of an activity that may be legal but that CFA Institute considers unethical?
A. Making legally required disclosures in marketing materials
B. Trading while in possession of material nonpublic information
C. Disclosure by an employee of his or her own company’s dishonest activity
B.
P11
An ethical decision-making framework will most likely:
A. include a pre-determined, uniform sequence.
B. focus exclusively on confirmable facts and relationships.
C. help avoid a decision that has unanticipated ethical consequences.
C.
P12
When an ethical dilemma occurs, an investment professional should most likely first raise the issue with a:
A. mentor outside the firm.
B. professional body’s hotline.
C. senior individual in the firm.
C.
