- CFA Exams
- CFA Level I Exam
- Study Session 1. Ethical and Professional Standards
- Reading 3. Guidance for Standards I-VII
- Subject 18. Standard VI (A) Disclosure of Conflicts
CFA Practice Question
There are 361 practice questions for this study session.
CFA Practice Question
For the past decade, Mark Gastel, CFA, has managed the account of Michael Griffin; in that time, he has developed a close relationship with his client. Griffin has a beach house in the Bahamas which he offers to Gastel and his family free use of for two weeks as a reward for the excellent returns generated by his account. Gastel is so busy at work that he does not tell anyone where he is going for vacation. When accepting Griffin's offer, Gastel least likely violates the CFA Institute Standard relating to ______.
A. Disclosure of Conflicts
B. Independence and Objectivity
C. Loyalty to Employer
Explanation: The Standards require that members not accept gifts or compensation that might reasonably compete with their employer's interests unless they obtain written consent from all parties involved. Arrangements such as that offered to Gastel may cause a conflict of interest or result in partiality that could impede Gastel's independence and objectivity.
User Contributed Comments 4
|sahilb7||Still can't understand how loyalty might not be compromised. It is as likely as independence and objectivity being compromised.|
|ascruggs92||^right? He already violated A&C because it is reasonable that such a cozy arrangement might compete with his employers interest. Yet this is saying it is more likely his objectivity could be impeded? So speculation of a potential violation is more likely than the one that already happened? Okay...|
|shwang||@sahilb7, ascruggs92: The question asks which Gastel is *least* likely to violate, but does not exclude the possibility that Gastel violates all 3. In the described situation, Gastel instantly failed to disclose conflicts and will very likely impair his independence and objectivity, but it is only after the damage is done that he might further damage his loyalty to his employer.|
|dbalakos||Do not forget to bring a ruler to measure possibilities of violation|