1. Connie Fletcher, CFA, works for a small money management firm that specializes in pension
accounts. Recently, a friend asked her to act as an unpaid volunteer manager for the city’s street
sweep pension fund. As part of the position, the city would grant Fletcher a free parking space in
front of her downtown office. Before Fletcher accepts, she should most appropriately:
A. do nothing because this is a volunteer position.
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B. inform her current clients in writing and discuss the offer with her employer.
C. disclose the details of the volunteer position to her employer and obtain written permission
from her employer.
2. Sarah Johnson, a portfolio manager, is offered a bonus directly by a client if Johnson meets
certain performance goals. To comply with the Standard that governs additional compensation
arrangements, Johnson should:
A. decline to accept a bonus outside of her compensation from her employer.
B. disclose this arrangement to her employer in writing and obtain her employer’s permission.
C. disclose this arrangement to her employer only if she actually meets the performance goals
and receives the bonus.
3. A member or candidate who has supervisory responsibility:
A. should place particular emphasis on enforcing investment-related compliance policies.
B. is responsible for instructing those to whom he has delegated authority about methods to
detect and prevent violations of the law and the Code and Standards.
C. has complied with the Standards if she reports employee violations to upper management and
provides a written warning to the employee to cease such activities.
4. Which of the following actions is a required, rather than recommended, action under the
Standard regarding diligence and a reasonable basis for a firm’s research recommendations?
A. Compensate analysts based on a measure of the quality of their research.
B. Review the assumptions used and evaluate the objectivity of third-party research reports.
C. Have a policy requiring that research reports and recommendations have a basis that can be
substantiated as reasonable and adequate.
5. Claire Marlin, CFA, manages an investment fund specializing in foreign currency trading. Marlin
writes a report to investors that describes the basic characteristics of her strategy, which is based
on an expected appreciation of the euro relative to other major currencies. Marlin shows the
projected returns from the strategy if the euro appreciates less than 5%, between 5% and 10%, or
more than 10%, while clearly stating that these forecasts are her opinion. Has Marlin violated the
Standard related to communication with clients?