Question 1

Greentree Advisory Inc. announced in its team meeting that it is partnering with Blueswan
Inc. to manage its mutual funds. Greentree's chief analyst, Adrian Thomas, also mentioned
that Blueswan's research team is expert in managing mutual funds because it is a team of
CFAs. He also mentioned that Blueswan's and Greentree's funds put together will be the
largest mutual fund in the city and they can collectively control the stock prices of the
companies in which they invest. Which of the following is most accurate?
a) Adrian has violated only Standard VII(B).
b) Adrian has not violated Standard II.
c) Adrian has violated both Standard II and Standard VII.

Question 2
Varric Jones recently became a CFA charterholder and received a promotion at the
brokerage firm that he works for. He subsequently posted on his social networking page
bragging about how the CFA designation helped him with the promotion. He also mentioned
that he was lucky that his employer didn't notice the trading error he made for a major
client; otherwise, he wouldn't have been promoted. Jones least likely violated the CFA Code
of Ethics or Standards of Professional Conduct pertaining to:
a) Standard I(D) Misconduct.
b) Standard IV(A) Loyalty.
c) Standard VII(B) Reference to CFA Institute, the CFA Designation and the CFA
Program.

Question 3
Johnson McCall, CFA, makes stock recommendations to clients after taking into account the
findings of a third-party quantitatively based research service used by his firm. The firm he
works for has performed due diligence to ensure that the research is sound. Which of the
following best describes McCall's position?
a) McCall is free to use the research.
b) McCall should not use third-party research when making recommendations; he can
only use his own firm's research.
c) McCall cannot use quantitatively based research, since it is often using selection
criteria that may not be understood in detail by the client.

Question 4
During an internal meeting, Jack O'Neil, CFA, who is the fund manager of the firm, had a
disagreement with an analyst on one of the stock picks. At the end, Jack stated that the
analyst must listen to him because he is a CFA charter holder and therefore knows better.
Did Jack violate any of the CFA Institute Standards of Professional Conduct according to the
Standards of Practice Handbook?
a) No violation.
b) Yes, he violated the standard pertaining to Responsibilities as a CFA Institute
Member.
 c) Yes, he violated the Standard pertaining to Professionalism.

Question 5
Kevin Diaz, CFA, decides to start his own investment advisory firm along with his friends. He
circulates marketing materials, mentioning his team's credentials, as all of them have a
minimum of 10 years' experience in the industry and are members of CFA. One year later,
Kevin uses the same marketing material even though two of the team members did not
renew their membership. Which of the following is most accurate?
a) Kevin violated Standard VII(A) by using CFA as a marketing tool.
b) Kevin violated Standard VII(B) by using CFA as a marketing tool without renewing
membership.
c) Kevin did not violate the standards, as the team had already earned its membership
when the marketing material was created.

Question 6
Charles Chaplane, who is not a member of CFA Institute, is a senior partner of a small
brokerage firm, Blue Moon Securities, which recently participated in a large stock offering.
The offering company has been given an unfavorable recommendation by his research
department due to the company's poor performance. Chaplane immediately calls his junior
analyst John Blumenberg, CFA, and instructs him to upgrade his recommendation.
Blumenberg comes up with a more favorable recommendation within a short period of
time. Blumenberg is least likely to have violated the Standards because he failed to:
a) Avoid a conflict of interest.
b) Maintain independence and objectivity.
c) Update his recommendation in a timely manner.

Question 7
Rachael Jocund, CFA, is an equity analyst following cigarette companies and a rising star in
her firm. Her supervisor has been recommending Morass Tobacco as a “buy” and asks
Jocund to take over the coverage of the company. He tells Jocund that she can change the
recommendation only with his approval. The Code and Standards say that:
a) Jocund must be independent and objective in her analysis.
b) Jocund should follow her supervisor's direction but notify the legal officer of her
firm of the situation.
c) Jocund should follow her supervisor's direction as she reports to him, although she
should keep records of any information that would lead her to feel uncomfortable
with the buy recommendation.

Question 8
Lenny Holmes, an investment adviser, presented the investment returns on portfolios she
manages based on a specific model. Lenny's manager suggested that she use another model
that will show increased returns. Lenny was hesitant about the change, but her manager
was confident about changing to the new model, as it will assure clients that the firm has
improved its models. Which of the following is most accurate?
 a) Lenny cannot change the model as mentioned by her manager.
b) Lenny can change the model and need not dissociate herself from the report.
c) Lenny can change the model but dissociate herself from the report, as it is not her
original work.

Question 9
A charterholder is most likely to be in violation of the Code and Standards which relate to
investment analysis, recommendations, and actions, if they:
a) dissociate from a report published, to which they contributed, but the final report
varies from their opinion.
b) retain relevant information in the form of twitter posts, blog posts, text messages
etc.
c) use unsound third party research while making recommendations to clients.

Question 10
Benjamin Clark, CFA, is an analyst at an investment bank. During his research for a quarterly
report published by the investment bank, he discovers that an important client of the firm
has manipulated its financial statements. The least appropriate action for Clark would be to
report the issue to the:
a) supervisor and dissociate himself from the report.
b) bank's compliance department.
c) supervisor but associate himself with the report.

Question 11
William Harris, a CFA candidate, is active in a blog that discusses CFA-related queries. He
takes his exam and posts the topics that were tested in the exam. He also mentions that he
did really well on the exam. Which of the following is most accurate?
a) William violated the standards by participating in a blog related to CFA.
b) William violated the standards by posting the topics tested in the exam.
c) William violated the standards by posting about how he did on his exams.

Question 12
Nick Austin has failed the CFA Level I exam three times and is registered for the exam for the
fourth time. In his frustration, Nick publicly posted the following comment on his social
media account: “I believe that the CFA Institute is limiting the percentage of passers so they
can profit more from the exam fee!” Which is correct?
a) Austin is not in violation of Standard I(D) nor Standard VII(A).
b) Austin is in violation of Standard VII(A) but not in violation of Standard I(D).
c) Austin is in violation of both Standard I(D) and Standard VII(A).
Question 13
A method of collecting public and nonpublic information about a company to calculate the
value of its securities is given by:
a) Mosaic theory.
b) Efficient market theory.
c) Modigliani-Miller theory.

Question 14
Jeff Taylor, a CFA candidate, feels that the curriculum offered by the CFA Institute does not
cover advanced mathematical concepts that are used in real business situations. He writes
to the CFA director to include such concepts in the curriculum. He also writes an article for a
local business magazine about how the curriculum can be revised and mentions the
important topics that were not tested in his exam. Which of the following is least accurate?
a) Jeff has not violated the standards by contacting the director of the CFA Institute.
b) Jeff has not violated the standards by commenting about the CFA exam's
curriculum and by suggesting topics that can be included.
c) Jeff has not violated the standards by listing the topics that were not tested in his
exam.

Question 15
Marianne Warner, CFA, is a portfolio manager at Creative Investment Management and in
charge of managing several discretionary portfolios. Her husband holds 25% of the shares of
Gurita Corporation, a computer services company. In line with the high sector growth,
Gurita Corporation went public earlier in the year. The share price skyrocketed, and the
value of her husband's holding went up from $1 million prior to the public offering to $8
million at the current market price. Warner believes that the current market price is too
high and immediately advises her husband to sell half of his shares. She also recommends
he put the proceeds into one of the discretionary funds she is currently managing. Is Warner
violating the Code and Standards?
a) Warner violates the Code and Standards for failing to disclose the conflicts of
interest.
b) Warner violates the Code and Standards for possessing material nonpublic
information.
c) From the information given, Warner does not appear to be violating the Code and
Standards.

Question 16
Which of the following is the correct usage of CFA marks?
a) Douglas Smith, CFA
b) Douglas Smith, Belgium-CFA
c) Douglas Smith, C.F.A
Question 17
Gerard Tan and Margaret Cho are currently registered for the CFA Level II exam. Tan's
business card reads, “Gerard Tan, CFA Level I.” Cho's resume states, “Level II Candidate in
the CFA Program.” Who violated the Standard regarding use of the professional
designation?
a) Tan only
b) Tan and Cho
c) Cho only

Question 18
Stella Bubsi and Larry Futura are candidates in the CFA Program. Bubsi has asked Futura
about the specific details of questions appearing on the exam. Futura has declined to
provide specific details, but does give the broad topical areas that were tested. Which of the
following statements is most accurate?
a) Both Bubsi and Futura have violated the Standards.
b) Bubsi has violated the Standards but Futura has not.
c) Neither Bubsi nor Futura has violated the Standards.

Question 19
Elizabeth Sweet and Adrian Chang have both passed Level II of the CFA exam program.
Sweet advertises a resume stating that she is a candidate for the CFA designation and has
passed Level II of the CFA program. Chang circulates a resume stating that he is a CFA
candidate who has passed Level II and expects to obtain his CFA charter in 2016, the
following year. Both have registered to take Level III in 2016. Which of the following
statements is most accurate?
a) Only Sweet has violated the Code and Standards.
b) Only Chang has violated the Code and Standards.
c) Both Sweet and Chang have violated the Code and Standards.

Question 20
Louise Overhill, CFA, makes the following two statements on her professional networking
profile page:
Statement 1: “I passed each of the CFA examination levels in consecutive years.”
Statement 2: “Passing the three CFA examination levels in consecutive years puts me among
an elite group of analysts from which employers can expect superior performance.”
How many of the statements made by Overhill are in compliance with the Standards?
a) Neither
b) Statement 1 is in compliance, but statement 2 is not
c) Statement 2 is in compliance, but statement 1 is not

Question 21
Whistleblowing can best be described as an act of:
 a) disclosing confidential statutory business information of a firm.
b) exposing illegal activity in a firm.
c) making false public allegations of illegal activity in a firm.

Question 22
Tim Evans and Ernesto Hodges have both recently been awarded the CFA charter. They
update their business cards and resumes as follows:
Tim Evans describes himself as “one of only two qualified CFAs at my firm."
Ernesto Hodges replaces his name on his business card with “Ernesto Hodges, CFA." Which
of the following statements is most accurate?
a) Both Evans and Hodges are in compliance with the Standards.
b) Evans is in compliance with the standards, but Hodges is not.
c) Neither Evans nor Hodges is in compliance with the Standards.

Question 23
Andrew Adams passed the CFA Level I exam before he graduated from university and got a
job offer from a reputable investment bank. Adams then posted on his social media blog
how important the CFA program is for someone who wants to be in the investment industry
and shared some of the questions from his CFA exam. Adams most likely violated the CFA
Code of Ethics or Standards of Professional Conduct pertaining to:
a) Conduct as Members and Candidates in the CFA Program.
b) Reference to CFA Institute, the CFA Designation, and the CFA Program.
c) All of the above.