CFA Practice Question

There are 361 practice questions for this study session.

CFA Practice Question

Beth Patrick, a fixed-income analyst at a brokerage company, assists her company's traders by developing in-house bond ratings to supplement those of the major bond rating services. The traders use disparities in the ratings to construct profitable investment strategies. Patrick makes inferences from nonmaterial private information and news events, which she reflects in her bond ratings. Patrick's approach ______.

A. reflects the mosaic theory
B. violates confidentiality rules
C. violates insider trading rules
Correct Answer: A

User Contributed Comments 8

User Comment
kalps Host of information is used, some of it nonmaterial but private - this is they key thing to look for in questions i guess
rstartsev I guess the key point here is 'non-material' issue. Whether it is private or not
eastbaypete News event is public event and in using non-material private information= cobbling the information together. In essence, Mosaic.
sanyukta rtstartsev - good point... non material is key word..
ggupta Yes, Non material information doesn't affect in any way! Right?
vatsal92 No violation if conclusion reached through analysis of Public info. + Non-material non-public info.
raffrobb Inferences from non material private information..Dead give-away!
gerdvar No violation whatsoever since a) the info is non material and b) the statement doesn't mention whether the access to that private info was through misappropriation so, as by the statement, the info was legit to use
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