CFA Practice Question

CFA Practice Question

Reed is a research analyst in the automobile sector and also does significant voluntary work for local charities. One of the charitable institutions, which serves the physically challenged, decides to buy five new vans to help its clients commute. Reed volunteers his time to take care of purchasing agreements. In order to repay a long-standing debt to a car dealer and earn some money on the side, he contracts to pay a price that is 15% higher than usual and splits the excess with his friend. The officers at the charity ultimately find out the excessiveness of the contracts and tell Reed that his services, donated or otherwise, are no longer required.

According to the Standards, ______
A. Reed should have disclosed his interest in the automobile dealings.
B. Reed should have disclosed that he expected some remuneration for his services.
C. Reed was in violation of Standard I (D) - Misconduct for being dishonest and untrustworthy.
Explanation: Reed engaged in conduct involving dishonesty, fraud, and misrepresentation in violation of Standard I (D) - Misconduct.

User Contributed Comments 4

User Comment
lwang014 Obviously
cong Not obviously... the question indicates that the member is penalized for dishonest behaviour outside his normal working environment. I guess the Standard apply to all of your work and personal life then.
dsobra cong, the standard applies to any behaviour that someone at work could make him think that you are not honest or trustful.. that means if you do something wrong outside work and people from work know it and think that they can trust you at work as what you did doesn't make you look dishonest, it's fine...
harrybay This is voluntary work. So it's still work and it's not considered to be outside of work. Having two jobs doesn't make one of them not a job.
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