CFA Practice Question

There are 361 practice questions for this study session.

CFA Practice Question

You are the Senior Analyst at an investment bank which is in the process of underwriting a firm's primary stock offering. However, through in depth analysis, you discover that the firm whose stock your bank is underwriting is experiencing severe cash flow problems that could lead to it becoming insolvent. This fact is NOT mentioned in the prospectus. What should you do?
A. You should notify potential investors with respect to the problem.
B. You should ignore the information due to its sensitivity.
C. You should report the issue to your supervisor.
Explanation: A member's responsibilities with respect to fundamental responsibilities are clearly set out in the statement below. The other solutions provided are not detailed in this standard.

A member who is aware of a misleading statement relating to a prospectus must follow the following procedures:
  • Report the misleading statement to the supervisor.
  • If the supervisor does not dissociate, then the member must sever all connections to the client.
  • The member should seek legal advice.

User Contributed Comments 6

User Comment
Dinosaur i suppose senior analysts have supervisors too
ElCarnal Yes why do they insist on SENIOR? It made me think he was in charge of the whole thing and therefore couldn't report to any supervisor.
uhupong I work at state street investor bank and here is our hierarchy

Associate 1
Associate 2
Assistant Vice president
Vice president
Senior Vice president
Executive Vice president
Vice Chairman
chaimand & CEO
atemple315 Yup - a senior analyst is fairly low down on the pecking order in most investment banks....
Shaan23 What if you're the supervisor?
hon132 Notify the guy who supervises you and if you're the president, tell Congress you did nothing wrong and resign quietly with the parachute
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