- CFA Exams
- CFA Level I Exam
- Topic 10. Ethical and Professional Standards
- Learning Module 3. Guidance for Standards I-VII
- Subject 2. Standard I (B) Independence and Objectivity
CFA Practice Question
Maggert is scheduled to visit the corporate headquarters of Hoch Industries. He expects to use the information obtained to complete his research report on Hoch stock. Maggert learns that Hoch plans to pay all of his expenses for the trip, including the costs of meals, hotel room, and air transportation. Which of the following actions would be the best course for Maggert to take under the Code and Standards?
B. Accepting the expense-paid trip, write an objective report, and disclose the value of the services accepted in the report.
C. Paying for all travel expenses, including costs of meals and incidental items, himself.
A. Writing the report without taking the trip.
B. Accepting the expense-paid trip, write an objective report, and disclose the value of the services accepted in the report.
C. Paying for all travel expenses, including costs of meals and incidental items, himself.
Correct Answer: C
User Contributed Comments 10
| User | Comment |
|---|---|
| robkaz | An audio seminar says "meals and entertainments are generally acceptable". Which is right? |
| LogicMan | In our normal life meals and entertainments are ok. in your exam don't answer it's OK! |
| cbb1 | Question is phrased as "Best Course", which is C. Alternative B is acceptable, but not best course. |
| Vernon | If he does accept the all expense paid trip, it could be perceived as extra ordinary. If he pays no questions will arise. |
| naldo318 | Tricky questions as I chose B as well. Good that I practised this. |
| dlo1 | B is not the "best course" because the report could be "perceived" as a compromise to objectivity. |
| TammTamm | Meals and travel expenses should only be paid for when there aren't any other accommodations that can be made. |
| hannovanwyk | to headquarters, pay own transportation and try and stay away from the aircraft.. |
| bantoo | What is being said in seminar is of little concern and may be confusing. Law and regulations has been framed by CFA society so we should stick to the book and nothing else. At the same time option b seems a plausible answer but c is the best one as it does not affect the independence and objectivity of the analyst at all. |
| schweitzdm | Accept the meal and entertainment as long as you fully disclose them after the trip. Another important criteria is, it's acceptable if you didn't know about it until arriving there. I suggest reading the entire ethics section from CFAI. Skip the other CFAI books unless something's foggy for you. |