CFA Practice Question

There are 361 practice questions for this study session.

CFA Practice Question

Which of the following actions is (are) NOT possible conflicted situations?

I. purchasing securities in a company that the analyst writes a report on
II. purchasing securities that are prohibited by the employer
III. purchasing securities that are allowed by the employer
IV. external board positions taken up by the employee
Correct Answer: III

Situations that may cause biased investment advice and conflicts that would cause a member not to act in the employer's best interests will need to be reported to the employer. This will involve the following actions:
  • External board positions taken up by the employee.
  • Purchasing securities in a company that the analyst writes a report on.
Any action that the employer expressly forbids is also not to be performed by the employee. Only possible conflicted situations that are expressly allowed by the employer are allowed under this standard.

User Contributed Comments 5

User Comment
jainrajeshv What is wrong if Analysts purchase the securities after publishing his report? Is it still fall under the conflict of Interest
epiziL2 I think so, that means conflict on future reccomendations given an ownership of the security.
dblueroom It's not a violation to own securities that you cover, but it represents a conflict of interest, and must be disclosed.
johntan1979 Note the difference between "allowed" and "approved". "Approved" can be conflicting interest but employer gives the go ahead.
marianne1 If allowed by the employer is fine. See explanaiton
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