CFA Practice Question

CFA Practice Question

Ron Prater and Mike Richards, two analysts who work for different employers, have been invited by a company they are both researching to tour some of their factories across the nation. The company has chartered group flights from site to site and arranged for accommodations with a chain of hotels that are near each site for a total of four nights. Ron Prater takes advantage of this offer, while Mike Richards insists on paying for his airfare and hotel, in-keeping with his own firm's policies. Who is right?
A. Mike is more ethical in this situation, as he is not taking anything that might compromise his independence or objectivity.
B. They are both behaving ethically, as they are following their firm's separate guidelines. As long as they are both careful to remain objective and cautious about the possible perceived compromise of integrity, there is no problem with the actions of either Ron or Mike.
C. Ron is more ethical, as he is not putting his own comfort ahead of the benefit of his firm.
Explanation: They are both behaving ethically, as they are following their firm's separate guidelines. As long as they are both careful to remain objective and cautious about the possible perceived compromise of integrity, there is no problem with the actions of either Ron or Mike.

User Contributed Comments 11

User Comment
pstebelp CFA allows Ron to take advantage?
achoi0 I feel like a lot of similar questions relating to independence and objectivity have been asked in other mock exams and it seems like the majority of them say to not accept the gifts... in order to avoid being perceived to have your independence jeopardized
chantal In most cases, pay for yourself to avoid potential conflict.
ggg123 Surely to accept nothing is more ethical. It is not to say the other person in unethical.
lisab0131 I will stop opt to say you should not accept any sort of gifts...
bd1984 I'm with Lisab--I was told in my prep classes to only accept air travel if the location was remote and to book it yourself would be unreasonable. Aka-going to visit an oil rig, you can let them pay for the helicopter ride, etc. I chose (A) because Mike is "more" ethical.
Mikehuynh I picked A also since that's the best way to protect objectivity and independence. The question also did not mention that the factories were remote or the accommodations provided by the company are the only ones. So I think A must be the correct one.
catsong I agree with answer "A" as well.
First, "more ethical" makes the difference.
Second, there is no guarantee that Ron will be fully objective and cautious. This is all too subjective.
moneyguy Accepting money will affect his objectivity.
emonik I picked "A" as well since he is not accepting gifts to compromise his independent and objectivity.
Mariana80 Also chose A because how would I know Ron is following his company's guidelines?
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