Question #1 of 9 Question ID: 1228561

Which of the following future trends poses a challenge to the investment profession?

A) Segmentation.

B) Standardization.

C) Consumerism.

Explanation

Four global trends that present challenges to investment professionals include

consumerism, regulations, globalization, and technological innovation.

(Study Session 2, Module 4.1, LOS 4.c)

Question #2 of 9 Question ID: 1228563

Which of the following methods best describes how professions establish trust?

A) Possessing a large and wide volume of knowledge.

B) Providing a service to society that meets the prescribed codes and standards.

C) Normalizing practitioner behavior.

Explanation

Professions can establish trust by normalizing practitioner behavior by developing and

promulgating codes and standards. They can also do so by providing a service to society
that exceeds (as opposed to merely meeting) the prescribed codes and standards. Finally,
merely possessing a large and wide volume of knowledge is not su cient; it should be
expert knowledge based on best practice.

(Study Session 2, Module 4.1, LOS 4.a)

Question #3 of 9 Question ID: 1228567

Which of the following global trends has most likely presented challenges to investment
professionals?

A) Creation of consistent standards.

B) Development of arti cial intelligence.

C) Regulations becoming looser, thereby increasing competition.

Explanation

Fintech trends (including arti cial intelligence and robo-advising, for example) have provided
alternatives to the services of investment professionals.

Globally, regulations have tended to become stricter (not looser) as consumers have
demanded additional protection, particularly since the market crash of 2008. Globalization
has helped investment professionals in that there is now an increased ability to create
consistent standards across the globe (i.e. GIPS).

(Study Session 2, Module 4.1, LOS 4.c)

Question #4 of 9 Question ID: 1228559

Which of the following is least likely to be an e ective method for professions to establish

trust?

A) Maintain a consistent body of expert knowledge.

B) Emphasize regulation as the mechanism to monitor professional conduct.

C) Have high entry requirements.

Explanation

Professions should establish high entry requirements and be self-regulating through the
monitoring of and imposing of sanctions on members. Although the profession must work
with regulators and follow all applicable laws, they should not allow regulators to be the sole
arbiters of professional conduct. A body of relevant knowledge is important, and it must
continually evolve, particularly in a changing industry such as investments.

(Study Session 2, Module 4.1, LOS 4.a)

Question #5 of 9 Question ID: 1228560

What process is used to revise and update the CFA Institute Global Body of Investment
Knowledge to ensure that it is globally relevant and re ects current best practice in the

investment profession?

A) Member engagement.

B) Practice analysis.

C) Competency review.

Explanation
Practice analysis is the process used to update the Global Body of Investment Knowledge
and the Candidate Body of Knowledge.

(Study Session 2, Module 4.1, LOS 4.b)

Question #6 of 9 Question ID: 1228566

Which of the following items is a speci c expectation for CFA Institute members as set out in
the Code of Ethics?

A) Use the highest standard of care and independent judgment in performing

professional activities.

B) Promote the viability of the global capital markets.

C) Place the interest of clients above those of the employer.

Explanation

The Code of Ethics speci cally mentions the promotion of the integrity and viability of the
global capital markets for the ultimate bene t of society.

The Code of Ethics speci cally mentions placing the interests of clients above an investment
professional's personal interests. It does not speci cally mention clients above employers.

The Code of Ethics requires reasonable care, not the highest standard of care in performing
professional activities.

(Study Session 2, Module 4.1, LOS 4.c)

Question #7 of 9 Question ID: 1228565

Which of the following statements is correct with regard to demonstrating that the CFA

Institute embodies many of the tenets of a profession?

A) CFA charterholders have speci c minimum annual continuing education

requirements.

B) CFA charterholders are provided with volunteer opportunities.

C) CFA charterholders are required to certify every three years that they adhere to
the Code and Standards.

Explanation
One way for a profession to establish trust is to encourage the engagement of members by
encouraging volunteerism. The CFA Institute and CFA societies around the world engage
members with numerous volunteer opportunities.

There are no minimum annual continuing education requirements for CFA charterholders
although continuing education is strongly encouraged through the voluntary Continuing
Education Program. CFA charterholders are required to certify every year that they adhere
to the Code and Standards.

(Study Session 2, Module 4.1, LOS 4.b)

Question #8 of 9 Question ID: 1228564

In the context of trust in the investment management profession, which characteristic is

speci cally mentioned with regard to the provision of services to clients?

A) Transparency.

B) Objectivity.

C) Equality.

Explanation

The expectation is for investment management professionals to serve their clients with care,
transparency, and integrity. Objectivity and equality are characteristics which are not
speci cally mentioned.

(Study Session 2, Module 4.1, LOS 4.b)

Question #9 of 9 Question ID: 1228562

Which characteristic of the CFA program re ects the de nition of profession within the context
of investment professionals?

A) The emphasis on an objective approach in providing good service.

B) The general knowledge needed to be an investment professional that is found in

the CFA curriculum.

C) The framework of practice and behavior in discharging duties.

Explanation
There is a framework for practice and behavior for investment professionals that is detailed
in The Standards of Practice Handbook.

The emphasis is on providing an ethical (not objective) approach to providing services as

re ected in the coverage of ethics and professional standards at all three levels of the CFA
curriculum. The CFA curriculum consists of speci c education and expert (not general)
knowledge needed to be an investment professional.

(Study Session 2, Module 4.1, LOS 4.a)