CFA Practice Question

There are 361 practice questions for this study session.

CFA Practice Question

Which one of the following statements about material non-public information is incorrect?
A. Restricting personal and proprietary trading will assist members in complying with the abovementioned standard of professional conduct.
B. A member may create and use material non-public information as long as the information is either constructed from publicly available information or non-material information.
C. An analyst will violate the above-mentioned standard of professional conduct if he makes use of the "mosaic theory."
Explanation: Insider trading should not result when a perceptive analyst reaches a conclusion about a corporate action through analysis of public information and items of non-material non-public information (that is, a "mosaic" of information).

User Contributed Comments 6

User Comment
xtrailer CFA Institute recognizes Mosaic Theory and there is no violation if an analyst uses it.
teddajr Under mosaic theory, financial analysts are free to act without risking liability
krisscfa I dint see the word "incorrect" closely.
Hishy For B, does carrying out the Mosaic Theory "create" Material and Non-Public Information?
gill15 We're not supposed to restrict all proprietary trading. I didnt bother reading the other answers after A and chose that because of that....

I wouldn't be as lazy on the exam but still...we're not supposed to restrict proprietary unless certain circumstances arise..
MTenaglia A lesson in reading every word in the question
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