1、By accessing this mock exam, you agree to the following terms of use: This mock exam is provided to currently-registered CFA candidates. Candidates may view and print the exam for personal exam preparation only. The following activities are strictly prohibited and may result in disciplinary and/or l
2、egal action: accessing or permitting access by anyone other than currently-registered CFA candidates; copying, posting to any website, emailing, distributing and/or reprinting the mock exam for any purpose. 2010 Level I Mock Exam: Morning Session ANSWERS AND REFERENCES Questions 1 through 18 relate
3、to Ethical and Professional Standards. 1. According to the CFA Institute Code of Ethics and Standards of Professional Conduct, trading on material nonpublic information is least likely to be prevented by establishing: A. fire-walls. B. watch lists. C. selective disclosure. Answer: C CFA Institute St
4、andards 2010 Modular Level I, Vol. 1, pp. 36-42 Study Session 1-2-c Recommend practices and procedures designed to prevent violations of the Code of Ethics and Standards of Professional Conduct C is correct as selective disclosure occurs when companies discriminate in making material nonpublic infor
5、mation public. Corporations that disclose information on a limited basis create the potential for insider-trading violations. Standard II (A). 2. William Wong, CFA, is an equity analyst with Hayswick Securities. Based on his fundamental analysis, Wong concludes the stock of a company he follows, Nol
6、vec Inc., is substantially undervalued and will experience a large price increase. He delays revising his recommendation on the stock from “hold” to “buy” to allow his brother to buy shares at a lower price. Wong is least likely to have violated the CFA Institute Standards of Professional Conduct re
7、lated to: A. duty to clients. B. reasonable basis. C. priority of transactions. Answer: B “Guidance for Standards I-VII”, CFA Institute 2010 Modular Level I, Vol. 1, pp. 48-50, 80-81, 94-95 【梦轩考资】 QQ106454842 专业提供CFA FRM全程高清视频+讲义By accessing this mock exam, you agree to the following terms of use: T
8、his mock exam is provided to currently-registered CFA candidates. Candidates may view and print the exam for personal exam preparation only. The following activities are strictly prohibited and may result in disciplinary and/or legal action: accessing or permitting access by anyone other than curren
9、tly-registered CFA candidates; copying, posting to any website, emailing, distributing and/or reprinting the mock exam for any purpose. Study Session 1-2-a Demonstrate a thorough knowledge of the Code of Ethics and Standards of Professional Conduct by applying the Code and Standards to situations in
10、volving issues of professional integrity. B is correct because there is nothing to suggest that Wong does not have a reasonable basis for his conclusion related to Nolvec. Standard V (A). 3. During an onsite company visit, Marsha Ward, CFA, accidentally overheard the Chief Executive Officer (CEO) of
11、 Stargazer, Inc. discussing the companys tender offer to purchase Dynamica Enterprises, a retailer of Stargazer products. According to the CFA Institute Standards of Professional Conduct, Ward most likely can not use the information because: A. it relates to a tender offer. B. it was overheard and m
12、ight be considered unreliable. C. she does not have a reasonable and adequate basis for taking investment action. Answer: A “Guidance for Standards I-VII”, CFA Institute 2009 Modular Level I, Vol. 1, pp. 36-42 Study Session 1-2-a Demonstrate a thorough knowledge of the Code of Ethics and Standards o
13、f Professional Conduct by applying the Code and Standards to situations involving issues of professional integrity. A is correct because trading on the information is restricted as it relates to a tender offer; it is clearly material, nonpublic information. Standard II (A). 【梦轩考资】 QQ106454842 专业提供CF
14、A FRM全程高清视频+讲义By accessing this mock exam, you agree to the following terms of use: This mock exam is provided to currently-registered CFA candidates. Candidates may view and print the exam for personal exam preparation only. The following activities are strictly prohibited and may result in discipl
15、inary and/or legal action: accessing or permitting access by anyone other than currently-registered CFA candidates; copying, posting to any website, emailing, distributing and/or reprinting the mock exam for any purpose. 4. Ian OSullivan, CFA, is the owner and sole employee of two companies, a publi
16、c relations firm and a financial research firm. The public relations firm entered into a contract with Mallory Enterprises to provide public relations services, with OSullivan receiving 40,000 shares of Mallory stock in payment for his services. Over the next 10 days, the public relations firm issue
17、d several press releases that discussed Mallorys excellent growth prospects. OSullivan, through his financial research firm, also published a research report recommending Mallory stock as a “buy.” According to the CFA Institute Standards of Professional Conduct, OSullivan is most likely required to
18、disclose his ownership of Mallory stock in the: A. press releases only. B. research report only. C. both the press release and the research report. Answer: C “Guidance for Standards I-VII”, CFA Institute 2009 Modular Level I, Vol. 1, pp. 21-26, 89-91 Study Session 12a Demonstrate a thorough knowledg
19、e of the Code of Ethics and Standards of Professional Conduct by applying the Code and Standards to situations involving issues of professional integrity. C is correct because members should disclose all matters that reasonably could be expected to impair the members objectivity. Standard I (B), Sta
20、ndard VI (A). 5. Jefferson Piedmont, CFA, a portfolio manager for Park Investments, plans to manage the portfolios of several family members in exchange for a percentage of each portfolios profits. As his family members have extensive portfolios requiring substantial attention, they have requested t
21、hat Piedmont provide the services outside his employment with Park. Piedmont notifies his employer in writing of his prospective outside employment. Two weeks later, Piedmont begins managing the family members portfolios. By managing these portfolios, did Piedmont violate any CFA Institute Standards
22、 of Professional Conduct? A. Conflicts of Interest B. Additional Compensation. C. Both Additional Compensation and Conflicts of Interest. Answer: C “Guidance for Standards I-VII”, CFA Institute 2009 Modular Level I, Vol. 1, p. 75, 89-91 【梦轩考资】 QQ106454842 专业提供CFA FRM全程高清视频+讲义By accessing this mock e
23、xam, you agree to the following terms of use: This mock exam is provided to currently-registered CFA candidates. Candidates may view and print the exam for personal exam preparation only. The following activities are strictly prohibited and may result in disciplinary and/or legal action: accessing o
24、r permitting access by anyone other than currently-registered CFA candidates; copying, posting to any website, emailing, distributing and/or reprinting the mock exam for any purpose. Study Session 12a Demonstrate a thorough knowledge of the Code of Ethics and Standards of Professional Conduct by app
25、lying the Code and Standards to situations involving issues of professional integrity. C is correct because members should disclose all potential conflicts of interest, the substantial time involved in managing family accounts, and when engaging in independent practice for compensation should not re
26、nder services until receiving written consent from all parties. Standard IV (B), Standard VI (A). 6. The eight major provisions of the Global Investment Performance Standards (GIPS) include all of the following except: A. Input Data, Calculation Methodology, and Real Estate. B. Fundamentals of Compl
27、iance, Composite Construction, and Disclosures. C. Calculation Methodology, Composite Construction, and Alternative Assets. Answer: C CFA Institute Standards 2010 Modular Level I, Vol. 1, pp. 141-142 Study Session 1-4-d Characterize the eight major sections of the GIPS standards. C is correct becaus
28、e Alternative Assets is not among the eight major provisions or sections of the Global Investment Performance Standards which include: Fundamentals of Compliance, Input Data, Calculation Methodology, Composite Construction, Disclosures, Presentation and Reporting, Real Estate, and Private Equity. St
29、andard II, Provisions of The Global Investment Performance Standards. 7. Hui Chen, CFA, develops marketing materials for an investment fund he founded three years ago. The materials show the 3-, 2- and 1-year returns for the fund. He includes a footnote that states in small print “Past performance d
30、oes not guarantee future returns.” He also includes a separate sheet showing the most recent semi-annual and quarterly returns, which notes they have been neither audited nor verified. Has Chen most likely violated any CFA Institute Standards of Professional Conduct? A. No. B. Yes, because he includ
31、ed un-audited and unverified results. C. Yes, because he did not adhere to the global investment performance standards. Answer: A 【梦轩考资】 QQ106454842 专业提供CFA FRM全程高清视频+讲义By accessing this mock exam, you agree to the following terms of use: This mock exam is provided to currently-registered CFA candid
32、ates. Candidates may view and print the exam for personal exam preparation only. The following activities are strictly prohibited and may result in disciplinary and/or legal action: accessing or permitting access by anyone other than currently-registered CFA candidates; copying, posting to any websi
33、te, emailing, distributing and/or reprinting the mock exam for any purpose. “Guidance for Standards I-VII”, CFA Institute 2009 Modular Level I, Vol. 1, pp. 64-65 Study Sessions 1-2-a Demonstrate a thorough knowledge of the Code of Ethics and Standards of Professional Conduct by applying the Code and
34、 Standards to situations involving issues of professional integrity. A is correct because the Standards require members to make reasonable efforts to make sure performance information is fair, accurate, and complete. The Standards do not require compliance with Global Investment Performance Standard
35、s (GIPS), auditing, or verification requirements. Standard III (D) 8. Charlie Mancini, CFA, is the Managing Director for Business Development at SV Financial, (SVF), a large U.S. based mutual fund organization. Mancini has been under pressure recently to increase revenues. In order to secure busines
36、s from a large hedge fund manager based in Asia, Mancini recently approved flexible terms for the funds client agreement. To allow for time zone differences, the agreement permits the hedge fund to trade in all of SVFs mutual funds six hours after the close of U.S. markets. Did Mancini violate any C
37、FA Institute Standards of Professional Conduct? A. No. B. Yes, with regard to Fair Dealing. C. Yes, with regard to Fair Dealing and Material Nonpublic Information. Answer: C “Guidance for Standards I-VII”, CFA Institute 2010 Modular Level I, Vol. 1, pp. 45, 53-55 Study Sessions 1-2-a Demonstrate a t
38、horough knowledge of the Code of Ethics and Standards of Professional Conduct by applying the Code and Standards to situations involving issues of professional integrity. C is correct because clients should be treated fairly and impartially. Standard III (B). In addition, the flexible trading terms
39、allow the hedge fund manager to enrich themselves and is a violation of Standard II A, concerning trading on material nonpublic information. This is also a conflict of interest, Standard VI (A), Disclosure of Conflicts. 【梦轩考资】 QQ106454842 专业提供CFA FRM全程高清视频+讲义By accessing this mock exam, you agree to
40、 the following terms of use: This mock exam is provided to currently-registered CFA candidates. Candidates may view and print the exam for personal exam preparation only. The following activities are strictly prohibited and may result in disciplinary and/or legal action: accessing or permitting acce
41、ss by anyone other than currently-registered CFA candidates; copying, posting to any website, emailing, distributing and/or reprinting the mock exam for any purpose. 9. Ron Dunder, CFA, is the CIO for Bling Trust (BT), an investment advisor. Dunder recently assigned one of his portfolio managers, Do
42、ug Chetch, to manage several accounts that primarily invest in thinly traded micro-cap stocks. Dunder soon notices that Chetch places many stock trades for these accounts on the last day of the month, towards the markets close. Dunder finds this trading activity unusual and speaks to Chetch who expl
43、ains that the trading activity was completed at the clients request. Dunder does not investigate further. Six months later regulatory authorities sanction BT for manipulating micro-cap stock prices at month end in order to boost account values. Did Dunder violate any CFA Institute Standards of Profe
44、ssional Conduct? A. No. B. Yes, because he failed to reasonably supervise Chetch. C. Yes, because he did not report his findings to regulatory authorities. Answer: C “Guidance for Standards I-VII”, CFA Institute 2010 Modular Level I, Vol. 1, pp. 76-78 Study Sessions 1-2-a Demonstrate a thorough know
45、ledge of the Code of Ethics and Standards of Professional Conduct by applying the Code and Standards to situations involving issues of professional integrity. B is correct because the CFA Institute Standard on Responsibilities of Supervisors, Standard IV (C), requires members/candidates to take step
46、s to detect and prevent violations of laws, rules and regulations. Dunder failed in his supervisory role when he accepted Chetchs explanation of the unusual trading activity. Dunder should have reviewed the clients goals and objectives, and records, to see if they in fact requested month-end trading
47、. Regardless of the explanation provided by Chetch Dunder should have investigated further. 【梦轩考资】 QQ106454842 专业提供CFA FRM全程高清视频+讲义By accessing this mock exam, you agree to the following terms of use: This mock exam is provided to currently-registered CFA candidates. Candidates may view and print th
48、e exam for personal exam preparation only. The following activities are strictly prohibited and may result in disciplinary and/or legal action: accessing or permitting access by anyone other than currently-registered CFA candidates; copying, posting to any website, emailing, distributing and/or repr
49、inting the mock exam for any purpose. 10. Ross Nelson, CFA, manages accounts for high net worth clients including his own familys account. He has no beneficial ownership in his familys account. Because Nelson is concerned about the appearance of improper behavior in managing his familys account, when his firm purchases a block of securities, Nelson allocates to his familys account only those shares that remain after his ot
