- CFA Exams
- CFA Exam: Dec. 2020 Level 1
- Study Session 1. Ethical and Professional Standards
- Reading 3. Guidance for Standards I-VII
- Subject 3. Standard I (C) Misrepresentation
CFA Practice Question
There are 361 practice questions for this study session.
A. Reasonable and Adequate Basis
B. Prohibition Against Misrepresentation of Services
C. Use of CFA Designation
Regarding C: Only CFA or Chartered Financial Analyst should appear after the charterholder's name. "John Smith, CFA," or "John Smith, Chartered Financial Analyst," is a correctly indicated designation.
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C is also wrong since he is using CFA as noun.
why is (A) not wrong? did statement exhibit reasonable and adequate basis that avg performance is +30% ?
I think C is OK. He is not misrepresenting himself and is not exagerating the meaning or implications of membership in CFA Institute. Furthermore, Exhibit 2 (in Section VII clearly shows taht you can use CFA as a nount and that Mark Meyers, CFA is teh correct way to show the designation.
Why B is wrong: "Standard I (C) prohibits members and candidates from guaranteeing clients specific return on investments that are inherently volatile." (CFA Reading 2, 2006, p. 27)
Why C is wrong: "Therefore, the CFA mark must always be used as an adjective, never as a noun. The mark should not be used in the plural or in the possessive. For example, references to a 'CFA' or a 'Chartered Financial Analyst' are improper. A proper use of the designation would be to state that one is a 'CFA charterholder' or that 'one has earned the right to use the CFA designation'. (CFA readings, the chapter on proper and ethical use of the CFA designation, p. xxxiii)
I can only see B being the right answer. C is definitely wrong. Standard VII. Quote " The CFA marks must always be used either after a charterholder's name or as adjectives.." You can't a say, he/she is a CFA, but can say John Smith, CFA.
C is definitely the wrong answer or everyone in my firm is violating the charter. Note that when you put the designation behind the name, you are describing the person of that name, making the CFA an adjective.
i think the correct ans are (A)and (B) instead of (B)and (C).....howcome (C) is correct and (A)is incorect. The statement doesnt give adeqate reasons for the avg anual performance of +30%
Okay, I think we all agree that he is misrepresenting his services by guaranteeing 30% annual return. In regards to "C", I think since this is a sentence (imagine a newspaper article), you cannot say Mark Meyers, CFA, blah blah blah. Can anyone comment on why "C" is incorrect?
Maybe C is right because it's kind of misleading: CFA's guarantee...30%...
isnt' it because the designation of CFA means to follow the standards and ethics, which in this case, he 'guarantees'... i dont think u can guarantee a performance... the word 'designation' i dont think they meant the letters CFA is used inproperly, more of what the chartered really means, no??
The use of the CFA designation above is incorrect because you must say:
"Mark Meyers, CFA Charterholder"
CFA is the adjective describing Charterholder - the noun.
pg 106 of the Level I manual clearly shows that Your Name, CFA is a correct reference. So is Your Name, Chartered Financial Analyst.
John Smith is a CFA charterholder
Amy Jones, CFA, is a portfolio manager
John Smith is a holder of the right to use the Chartered Financial Analyst designation
John Smith is a CFA
John Smith and Amy Jones are CFAs
He can show that historically he has been making 30% profit but he can not gurantee a percentage of performance in future. This is against CFA guidelines.
Any one can tell why A is not wrong?
The correct answer is C because the use of the Charter Financial Analyst Designation as noted in the LOS on CFA designation says
"CFA Institute's members, CFA charterholders and candidates in the CFA program must utilize their designation in the correct manner so as not to mislead the investing public. Since achievement of the CFA charter signifies a certain degree of knowledge, the public and clients expect a certain degree of knowledge when encountering the designation CFA." The use of "Meyers, CFA, ... is correct but the next part of the sentence violates the use of CFA
A is not necessarily wrong.
Reasonable and Adequate only means that the author's statement needs a solid basis, not that the statement must contain this basis.
I meant that he has not necessarily violated reasonable and adequate basis.
there was an example in the textbook illustrating this. he cannot guarantee future performance.
A is probably not wrong because there are certain types of guaranteed products that you can quote returns for. I can't imagine 30% being one of them, but that part tripped me up too.
B is correct answer, he is violating code by giving guarantee for future performance.
A is no whare in the question,becoz reasonable and adquate basic are required to make financial recommandation, action, and anaylsis. he is advertising about himself rather that giving someone advice on financinal investment. i hope it will do some addition in discussion.
C is not wrong at all. Please see page 145 of CFAI Ethics book for examples of how to properly represent the CFA designation.
JEEZ . beware of these people who pontificate on analystnotes people. Not everyone who is adamant actually is right, they're just oblivious .
the first post is an exemplar .