Unformatted text preview: 金程教育 WWW.GFEDU.NET 专业·领先·增值 Ethics
1. Gabrielle Gabbe, CFA has been accused of professional misconduct by one
of her competitors. The allegations concern Gabbe's personal bankruptcy
filing ten years ago when she was a college student and had a large amount
of medical bills she could not pay. By not disclosing the bankruptcy filing to
her clients, did Gabbe most likely violate any CFA Institute Standards of
B. Yes, related to Misconduct.
C. Yes, related to Misrepresentation.
2. While at a bar in the financial district after work, Ellen Miffitt, CFA overhears
several employees of a competitor discuss how they will manipulate down
the price of a thinly traded micro cap stock's price over the next few days.
Miffitt's clients have large positions of this stock so when she arrives at work
the next day she immediately sells all of these holdings. Because she has
determined that the micro cap stock was suitable for all of her accounts at its
previously higher price, Miffitt buys back her client's original exposure at the
end of the week at the new, lower price. Which CFA Institute Standards of
Professional Conduct did Miffitt least likely violate?
A. Market Manipulation
B. Preservation of Confidentiality
C. Material Non Public Information
3. Sherry Buckner, CFA manages equity accounts for government entities
whose portfolios are conservative and risk averse. Since the objective of her
clients is to maximize returns with the lowest possible risk, Buckner
considers adding to their holdings a new, thinly-traded, leveraged derivative
product which she believes has the potential for high returns. To make her
investment decision, Buckner relies upon comprehensive research from an
investment bank that has a solid reputation for top quality research. After
her review of that research, Buckner positions her accounts so that each
has a 10% allocation to the derivative product. Did Buckner most likely
violate any CFA Institute Standards of Professional Conduct by purchasing
the derivative for her clients?
B. Yes, related to Suitability.
C. Yes, related to Loyalty, Prudence and Care.
4. Joyce La Valle, CFA is a portfolio manager at a global bank. La Valle has
been told she should use a specific vendor for equity investment research
that has been approved by the bank's headquarters. Because La Valle is
located in a different country than the bank's headquarters, she is 专业来自百分百的投入 金程教育 WWW.GFEDU.NET 专业·领先·增值 uncomfortable with the validity of the research provided by this vendor when
it applies to her country and would like to use a local vendor on whom she
has already conducted due diligence. Which of the following actions
concerning the research vendor should La Valle most likely take to avoid
violating the CFA Institute Standards of Professional Conduct?
A. Use the local research vendor.
B. Use the bank-approved research vendor.
C. Use both the local and the bank-approved research vendors.
5. Yao Tsang, CFA has a large percentage of his net worth invested in the
Australian mining company, Outback Mines, which he has held for many
years. Tsang is in the process of moving to a new employer where he is
responsible for initiating research on mining companies. Shortly after his
move, Tsang is asked to complete a research report on Outback. In order to
meet the CFA Institute Standards of Professional Conduct concerning his
stock holding, which of the following actions is most appropriate for Tsang to
A. Disclose his stock holding to his employer and to clients.
B. Sell his stock holdings to eliminate any potential conflict of interest.
C. Refuse to write the report and ask his employer to assign another analyst
to complete the analysis.
6. Ken Kawasaki, CFA shares a building with a number of other professionals
who are also involved in the investment management business. Kawasaki
makes arrangements with several of these professionals, including
accountants and lawyers, to refer clients to each other. There is an
expectation that an informal score is kept so that the referrals will equal out
over time, so there are no cash payments. Kawasaki never mentions this
arrangement to clients or prospective clients. Does Kawasaki's agreement
with the other building occupants most likely violate any CFA Institute
Standards of Professional Conduct?
B. Yes, related to referral fees.
C. Yes, related to communication with clients.
7. Florence Zuelekha, CFA, is an equity portfolio manager at Grid Equity
Management (GEM), a firm specializing in commodities. Zuelekha, who
previously focused on alternative energy, recently attends her first
commodity conference, sponsored in large part by GEM. Independent
industry experts, argued commodities would increase in value and
recommended investors hold at least 10% of their portfolio assets in
commodities based on consistent increases in their values over the
previous two years. Without doing any additional research, Zuelekha
recommends to all her clients an immediate allocation of 5% of their 专业来自百分百的投入 金程教育 WWW.GFEDU.NET 专业·领先·增值 portfolio into commodities. Over the next few weeks, Zuelekha moves her
own portfolio to a 10% commodity allocation. Which of the CFA Standards
did Zuelekha most likely violate?
A. Priority of Transactions.
B. Independence and Objectivity.
C. Diligence and a Reasonable Basis.
8. Kazuya Kato, CFA, is a widely followed economist at a global investment
bank. When Kato opines on economic trends, markets react by moving
stock valuations considerably. When Kato receives information of a
temporary oversupply of rare earth metals, he issues a forecast that price
trends for rare earth metals will be down significantly on a long-term basis.
Kato also secretly sells his report to a widely followed Internet site. Prior to
issuing this forecast, Kato emailed all portfolio managers at his bank with a
copy of his report indicating that his opinion would be reversed shortly so
there will be trading opportunities. Kato least likely violated which of the
following CFA Institute Code of Ethics and Standards of Professional
A. Market Manipulation.
B. Priority of Transactions.
C. Additional Compensation Arrangements.
9. Joan Tasha, CFA, a supervisor at Olympia Advisors (OA), wrote and
implemented compliance policies at her firm. A long time OA employee,
Derek Longtree, recently changed the asset allocation of a client, which is
inconsistent with her financial needs and objectives and with OA’s policies.
Until now Longtree has never violated OA’s policies. Tasha discusses the
issue with Longtree but takes no further action. Do Tasha's actions
concerning Longtree most likely violate any CFA Institute Standards of
B. Yes, because she failed to detect Longtree’s actions.
C. Yes, because she did not take steps to ensure that the violation will not
10. Tammi Holmberg is enrolled to take the Level I CFA examination. While
taking the CFA examination, the candidate on Holmberg's immediate right
takes a stretch break and a piece of paper from his pocket falls onto
Holmberg's desk. Holmberg glances at the paper and realizes there is
information written on the paper, which includes a formula Holmberg needs
for the question she is working on. Holmberg had not memorized this
formula and could not complete the question without this information.
Holmberg pushes the paper off her desk and uses the formula to complete
the question. According to the CFA Institute Code of Ethics and Standards 专业来自百分百投入 金程教育 WWW.GFEDU.NET 专业·领先·增值 of Professional Conduct, Holmberg most likely:
A. compromised her exam.
B. was free to act on the information that fell on her desk.
C. is responsible for notifying exam proctors of her neighbor's violation. Economics:
1. Regarding a company’s production function, both labor costs and capital
costs are best described as:
A. fixed in the long run.
B. variable in the long run.
C. variable in the short run.
2. Consider the following data for a firm operating in perfect competition:
Quantity Total revenue Total cost
The firm’s profit-maximizing output (in units) is most likely:
C. in excess of 24.
3. Suppose inflation increases due to increases in government spending and a
reduction in taxes. Such inflation is best described as:
A. cost-push inflation.
B. demand-pull inflation.
C. monetarist cycle theory.
4. In competitive markets, when the efficient quantity is produced, the least
likely result is to:
A. maximize total surplus.
B. generate underproduction.
C. minimize deadweight loss.
5. The crowding-out effect is most likely associated with:
A. falling real interest rates.
B. government budget deficits.
C. government budget surpluses.
6. Assume that a monopoly is charging a price higher than the price that would
exist in pure competition. If the monopoly decides to increase the price even 专业来自百分百的投入 金程教育 WWW.GFEDU.NET 专业·领先·增值 more, the deadweight loss to society will most likely:
C. remain the same.
7. Assume the U.S. Federal Reserve system (the Fed) has decided to lower
interest rates in the economy. To carry out this policy, the Fed will most likely:
A. sell securities.
B. buy securities.
C. increase required reserve ratios.
8. Land is best characterized as:
A. having perfectly inelastic supply.
B. being a nonrenewable natural resource.
C. being priced according to the Hotelling principle.
9. Which of the following is least likely to be a valid function/characteristic of
A. acts as a unit of account.
B. provides a means of payment.
C. requires a double coincidence of wants.
10. The consumer price index (CPI) this year is 252. The CPI last year was
246. The inflation rate this year is closest to:
C. 6.00%. Fixed Income
1. A 5-year floating-rate security was issued on January 1, 2006. The coupon
rate formula was 1-year LIBOR + 300 bps with a cap of 10% and a floor of 5%
and annual reset. The 1-year LIBOR rate on January 1st of each year of the
security’s life is provided in the following table:
C. 6.5%. 专业来自百分百的投入 金程教育 WWW.GFEDU.NET 专业·领先·增值 2. Which of these is the best example of an embedded option granted to
A. A prepayment option
B. A floor on a floating rate security
C. An accelerated sinking fund provision
3. A bond has a 10-year maturity, a $1,000 face value, and a 7% coupon rate.
If the market requires a yield of 8% on the bond, it will most likely trade at a:
C. discount or premium, depending on its duration.
4. When interest rates fall, the price of a callable bond will:
A. fall less than an option-free bond.
B. rise less than an option-free bond.
C. rise more than an option-free bond.
5. A bond is selling for 98.2. It is estimated that the price will fall to 96.6 if yields
rise 30 bps and that the price will rise to 100.1 if yields fall 30 bps. Based on
these estimates, the duration of the bond is closest to:
6. The most direct disadvantage of investing in a callable security relative to an
otherwise identical option-free security is:
A. increased default risk.
B. lower interest payments.
C. decreased price appreciation potential.
7. What type of risk does the bid-ask spread most closely measure?
A. Default risk
B. Inflation risk
C. Liquidity risk
8. A bond market analyst states, “The current term structure of interest rates is
upward sloping which implies the market believes short-term interest rates will
rise in the future.” Which theory of the term structure of interest rates does the
analyst most likely believe?
A. Pure expectations theory.
B. Liquidity preference theory.
C. Market segmentation theory.
9. An investor who has a 42% marginal tax rate is analyzing a tax-exempt bond 专业来自百分百的投入 金程教育 WWW.GFEDU.NET 专业·领先·增值 that offers a yield of 3.74%. The taxable-equivalent yield of the bond is closest
10. If the price of a U.S. Treasury security is higher than its arbitrage-free value,
a dealer can generate an arbitrage profit by:
A. shorting the U.S. Treasury security and calling it from the issuer.
B. shorting the U.S. Treasury security and reconstituting it from strips.
C. buying the U.S. Treasury security, stripping it and selling the strips.
11. Holding all other characteristics the same, the bond exposed to the
greatest level of reinvestment risk is most likely the one selling at:
B. a discount.
C. a premium.
12. A portfolio consists of four bonds with the following characteristics:
Bond Market value Duration
The duration of the portfolio is closest to:
13. A bond has duration of 4.50 and convexity of -39.20. If interest rates
increase by 0.5%, the percentage change in the bond’s price will be closest to:
C. -2.15%. 专业来自百分百的投入 ...
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This note was uploaded on 11/02/2011 for the course FINANCE 612 taught by Professor Liyang during the Spring '11 term at Covenant School of Nursing.
- Spring '11