Question:1 Which of the following is a CORRECT statement of a member's duty under the Code and Standards? A) ( j+ w4 D* s! {/ E1 u6 p
( }/ g. ]+ `* k: L: d8 P# [8 v) g: V | A member is required to comply only with applicable local laws, rules, regulations, or customs even though the CFA Institute code and Standards may impose a higher degree of responsibility or a higher duty on the member. ! |) |: T8 K# K
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+ H, i+ ^2 ~8 @7 S | A member who trades securities in a foreign securities market where no applicable local laws or stock exchange rules regulate the use of material nonpublic information may take investment action based on this information. . z# I$ {5 t: d* i- S6 H( ~- e$ ]
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! V' y$ D0 ?7 l8 p3 N; `. u2 d | A member who trades securities in a country with less strict laws, rules, regulations, or customs may follow those laws if he discloses this information to his client. ; l4 J; x# i& @- l L. B' H6 x
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| In the absence of specific applicable law or other regulatory requirements, the Code and Standards govern the member's actions.
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Question:2 Which of the following is least likely a component of the Code of Ethics? In dealing with the public, clients, prospects, employers, employees, and fellow members, CFA Institute members shall act with: A) . \7 [3 G8 u6 N
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3 M: F) m; c& k( r% q) Q | integrity.
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| competence.
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; P2 _1 H* n# S, Q# l | humility.
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R- ]8 ~2 i$ iQuestion:3 According to the CFA Institute Standards of Professional Conduct, which of the following statements about members with supervisory responsibility is FALSE? Members with supervisory responsibility: A)
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- m* t, P7 i5 m/ d9 p | must make reasonable efforts to detect violation of laws, rules, regulations, and the Code and Standards. 4 D0 Z: O) t0 @8 u# f/ f( y
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- O6 b! }# L8 { | are expected to have in-depth knowledge of the Code and Standards and to apply this knowledge in discharging their supervisory responsibilities.
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| are relieved of their supervisory responsibility if they delegate their supervisory duties to other members of CFA Institute.
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| should bring an inadequate compliance system to the attention of the firm's senior managers and recommend corrective action. " |, ?# E {( U4 B, v* M q
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& s0 e+ G# V& wQuestion:4 Tony Calaveccio, CFA, is the manager of the TrustCo Small Cap Venture Fund in Toronto. He places trades for the fund with River City Brokerage. River City presents Calaveccio with a case of wine at Christmas each year. He estimates that the value of the case is about US $90. He does not disclose this fact in the prospectus of the small cap venture fund. This action is:
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; F. L/ X/ O& } | not in violation of the Code and Standards.
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| in violation of the Standard concerning independence and objectivity. 9 n5 Y$ A& P5 E* }$ M" q
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$ b& Z# Z2 c/ v4 J6 f | in violation of the Standard concerning disclosure of conflicts to clients and prospects.
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( [4 k& B# Q, i4 y | in violation of the Standard concerning disclosure of additional compensation arrangements.
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' O8 g( j6 W0 uQuestion:5 Adequate investment policy disclosure typically means clearly identifying the policy in: A) , \( ]# I6 l* N0 d/ L" ^4 D+ z
" E3 B8 |3 D6 [: p | the prospectus. 9 g' j! r9 f- H5 A) ^1 @
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| B)
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| a tombstone advertisement in the Wall Street Journal or Financial Times. 5 O5 |4 ?7 Y1 |4 M
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| the annual report.
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* I. x+ h, u; ~( p/ b | an annual letter to all fund shareholders. |
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