- CFA Exams
- CFA Level I Exam
- Topic 10. Ethical and Professional Standards
- Learning Module 3. Guidance for Standards I-VII
- Subject 15. Standard V (A) Diligence and Reasonable Basis
CFA Practice Question
George Moses, CFA, follows Technicorp as an analyst for a brokerage company. Extensive study has led Moses to rate Technicorp as a "sell", largely because of increasing competition in the industry. At a recent CFA Institute's society meeting, Moses discussed Technicorp's prospects with two other analysts who also follow the company. Although the other analysts did not say why, both said that Technicorp was about to experience rapid earnings growth. Upon returning to his office, Moses released a "buy" recommendation based on this new information. Moses was in ______.
B. violation of CFA Institute's Standards because he did not seek approval of the change from his supervisor
C. violation of CFA Institute's Standards because he did not have a reasonable and adequate basis for his recommendation
A. violation of CFA Institute's Standards because he copied the opinions of others
B. violation of CFA Institute's Standards because he did not seek approval of the change from his supervisor
C. violation of CFA Institute's Standards because he did not have a reasonable and adequate basis for his recommendation
Correct Answer: C
User Contributed Comments 4
| User | Comment |
|---|---|
| dipta | The critical clue is that the other analysts did nt say "WHY". Had they said so, then Moses would have had the obligation to disclose that the fact and opinion belonged to someone else - plagiarism |
| snider | but he does not have any responsibility to do so: i.e. encourage his friend to disclose the info. |
| johntan1979 | What if the other 2 analysts did their own respective extensive research and diligence and then rate it as a BUY? Will Moses be in violation by switching from SELL to BUY? |
| raffrobb | Members and Candidates MUST check 2nd and 3rd party research too. |