CFA Practice Question

There are 361 practice questions for this study session.

CFA Practice Question

Which of the following statements is (are) NOT correct?

I. The mere appearance of a conflict may present a problem in terms of this standard.
II. Several firms restrict their employees with regard to their investment freedom, and per this standard employees are obliged to adhere to those restrictions.
III. If a profit is made on a conflicted situation, the profit will always need to be repaid to the firm.
IV. All potential conflicts should be reported to the employer.
Correct Answer: III

If a profit is made on a conflicted situation, the firm will need to decide the best course of action under the circumstances. However, it is incorrect to say that the profit on the conflicted situation will always need to be repaid to the firm.

User Contributed Comments 6

User Comment
cbb1 Since this Standard is Responsibilites to the Employer, the Employer (the Firm) can decided whether the conflicted profit can be kept by the employee; this is NOT a conflict related to a client.
Khadria "IV" may also not correct because "All potential conflicts" may not have been related to the employer and hence need not be disclosed to the employer.

What about the disclosure to clients? Are there possibilities of the conflicts where only client needs to be informed?
ribi conflicts here refer to conflicts of interests I guess, since this is for the Disclosure of Conflicts section. The textbook said so (all must be disclosed to the employer)
hannovanwyk ALWAYS BE AWARE OF STRONG WORD USAGE LIKE "ALWAYS". :)
NikolaZ To Khadria: All potential conflicts do need to be reported to the employer. Some of these conflicts will also need to be reported to the client. Reporting a conflict to a client, does not mean that this conflict need not be reported to the employer.
marianne1 All .... nicht ganz klar
You need to log in first to add your comment.