CFA Level 1 Ethics Questions Notes | Question Bank PDF |

CFA Level 1 Ethics Questions, Sample Notes and Question Bank were available for download in PDF Format. These Ethics Mock Practice Questions were contributed by Prof.William Mcarthy. Ethics Topic has one of the highest importance in CFA Level 1 Exam in terms of its Marks Weight. Combined reading of Ethics and FRA will give you immense marks in CFA Exam. In our previous post, we already provided CFA Level 1 Syllabus, Recommended Books for CFA Level 1 and also CFA Registration Dates. Ethics and Professional Standards has a very vast syllabus and these sample questions will help you in revising the subject quickly.

CFA Level 1 Ethics Questions Sample Mock Questions MCQs in PDF

Practice Question Notes from CFA Level 1 Ethics:

Ethics Mind Map Study Notes Download
Ethics Sample Question Notes Part 1 Download
Ethics Sample Question Notes Part 2 Download


CFA Level 1 Ethics and Professional Standards Syllabus:

The list of topics covered in CFA Level 1 Ethics syllabus are provided below:

Code of Ethics and Standards of Professional Misconduct

  • describe the structure of the CFA Institute Professional Conduct Program and the process for the enforcement of the Code and Standards;
  • state the six components of the Code of Ethics and the seven Standards of Professional Conduct;
  • explain the ethical responsibilities required by the Code and Standards, including the sub-sections of each Standard.

Guidance for Standards I–VII

  • demonstrate the application of the Code of Ethics and Standards of Professional Conduct to situations involving issues of professional integrity;
  • distinguish between conduct that conforms to the Code and Standards and conduct that violates the Code and Standards;
  • recommend practices and procedures designed to prevent violations of the Code of Ethics and Standards of Professional Conduct.

Introduction to Global Investment Performance Standards

  • explain why the GIPS standards were created, what parties the GIPS standards apply to, and who is served by the standards;
  • explain the construction and purpose of composites in performance reporting;
  • explain the requirements for verification.

GIPS Standards

  • describe the key features of the GIPS standards and the fundamentals of compliance;
  • describe the scope of the GIPS standards with respect to an investment firm’s definition and historical performance record;
  • explain how the GIPS standards are implemented in countries with existing standards for performance reporting and describe the appropriate response when the GIPS standards and local regulations conflict;
  • describe the nine major sections of the GIPS standards.

Ethics Sample Question 1:

Micheal is invests capital for one of his clients. Micheal attends an analyst meet where the issuer distributes designer watches to all the attendees. Micheal initially denies the gift but finally accepts it after much insistence from the client and after seeing that everyone is accepting it without fuss. Micheal can:

  1. Not accept gifts from issuers of securities under any circumstances
  2. Accept modest gifts
  3. Accept any gift, as long as it is disclosed

Right Answer: Accept modest gifts [According to Standard I B – Independence and Objectivity – modest gifts that do not exceed prescribed limits and entertainment are acceptable but special care should be taken by member analysts and investment managers to resist lavish gifts such as tickets, favors, job referrals and so on, which may be tied in with subtle pressures for favors possibly detrimental to clients.]

CFA Ethics Sample Question 2:

Josh is a portfolio analyst at Sedelweiss., a leading investment bank. Sedelweiss’s corporate policy prohibits its employees from trading in IPOs even if they are not being underwritten by Sedelweiss. Recently, a fast-growing internet firm, Sodel Solutions, announced that it was going public. Josh friend, Lalit, told him that he could get her bid in for a few shares ol the IPO. The size of the deal was very small, amounting to less than a couple of thousand dollars. Josh went ahead and bought the shares but did not think it was necessary to inform his supervisor about it. He;

  1. Violated Standard ID – Professional Misconduct – by violating company policy.
  2. Did not violate the AIMR code of conduct even though he violated the company policy since the size of her transaction was extremely small
  3. Violated Standard IV – Disclosure of Conflicts to Employer – by violating company policy.

Right Answer: ‘c’ : Sedelweiss policy is designed to prevent any conflicts or even appearances of conflicts of interest when its employees trade in capital markets. If Josh wants to trade in a particular IPO, he needs to obtain special permission from Sedelweiss Compliance department {and such permission may or may not be granted by Compliance). Without such an exception, Josh’s behavior is a violation of Standard IV – Disclosure of Conflicts to Employer.

Conclusion : CFA Level 1 Ethics Questions Notes

These Sample Question Notes from CFA Level 1 Ethics were provided only for educational purpose and we request users not to utilise them for any commercial purposes.