- CFA Exams
- CFA Level I Exam
- Topic 10. Ethical and Professional Standards
- Learning Module 71. Guidance for Standards I-VII
- Subject 5. Standard II (A) Material Nonpublic Information
CFA Practice Question
A CFA charterholder must comply with all laws and regulations relating to the use of material nonpublic information. "Material" refers to information likely to affect significantly the market price of the issuing company's securities or which is ______.
B. acquired by the financial analyst as a result of a special or confidential relationship with the issuing company
C. likely to be considered important by reasonable investors in determining whether to trade a particular security
A. derived by the financial analyst from direct communication with an issuing company's management
B. acquired by the financial analyst as a result of a special or confidential relationship with the issuing company
C. likely to be considered important by reasonable investors in determining whether to trade a particular security
Correct Answer: C
User Contributed Comments 7
| User | Comment |
|---|---|
| kalps | I think the last choice is the most relevant answer although I would not necessarily say that it is the only true answer. |
| mtcfa | The last choice is true by definition. |
| Analizer | Materiality has a lot to do with "importance". None of the other answer choices has that word. Hence it is correct |
| TammTamm | Because it would have the greatest effect if the information was given to the public. |
| AUAU | Reasonable investors considered importance. |
| Gooner7 | 'materiality' has nothing to do with who divulges info/how it was attained. it has to do with the content of the info itself |
| raffrobb | Material is relevant to the usefulness and impact on an investment decision rather than how acquired. Seems more the nature information and how pertinent or influential on a decision. Content seems to be the operative word, as pointed out by Gooner7. |