CFA Practice Question

There are 361 practice questions for this study session.

CFA Practice Question

In terms of CFA Institute's Standards of Professional Conduct as per Standard III(B) Fair Dealing, which of the following actions does NOT apply to making sure that all clients are treated fairly?
A. The firm should not trade for any person wishing to act against the recommendations of the firm.
B. Any person wishing to act against the recommendations of the firm should be allowed to do so.
C. When dealing with a security, the benefit of the dealing should be allocated fairly across all the clients of the firm on a pro rata basis.
Explanation: Any person wishing to act against the recommendations of the firm should be informed of the firm's recommendations prior to the firm trading for him or her.

User Contributed Comments 7

User Comment
rousseur Answer A and the explanation are quite different...
sunny That's why A is NOT correct! The other statements are.
judylyh why is B correct?
swt326 B is correct because if a client asks to sell a stock that the firm has a buy rating on, they should be allowed to do so, it is their investment. This is regardless of what the firm believes (can't force clients to buy a stock just because the firm believes the stock is a buy.)
MTenaglia B implies the client has been informed and thus is allowed to do so. A is incorrect, once informed of the recommendation, the client should be allowed to do so.
ascruggs92 I chose C because I thought they were trying to pull a fast one on us. I thought they'd say "Got you, bitches! It should be allocated fairly across all clients of the firm THAT THE INVESTMENT IS SUITABLE FOR on a pro rata basis."
alex2001 I'm with you on that ascruggs92
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