- 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
Which of the following would be considered "material"?
II. factual information from a corporate insider regarding a significant new contract for a company
I. an assumption based on speculation by a competitor about a significant new contract for a company
II. factual information from a corporate insider regarding a significant new contract for a company
Correct Answer: II
The source or relative reliability of the information determines materiality. The less reliable a source, the less likely the information provided would be considered material.
User Contributed Comments 7
| User | Comment |
|---|---|
| CFA19 | reliable and sig. info. |
| Masterkang | FACTUAL |
| TammTamm | Factual was the key word. |
| papal | factual makes it reliable |
| gaurabhscx | assumption can be anything so assumption is irrelivnt so it makes assumption the key word |
| dblueroom | no gaurabhscx, it's not the assumption, it is the "competitor" that is the key word. because the source of info is not as reliable if it were an expert following that particular industry. |
| raffrobb | Factual and corporate insider makes it material and influential on decision. |