Ethical And Professional Standards - Ethical And Professional Standards Section 1

Avatto>>CFA Level 1>>PRACTICE QUESTIONS>>Ethical And Professional Standards>>Ethical And Professional Standards Section 1

6. Which of the following is least likely a challenge faced by professionals to display ethical behavior?

  • Option : B
  • Explanation : Challenges faced by professionals to display ethical behavior include: 1) overestimating one’s morality and 2) underestimating the effect of situational influences.
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7. Which of the following statements is most likely correct?

  • Option : A
  • Explanation : Statement B is incorrect because loyalty can have both positive and negative effects towards one’s behaviour. Statement C is incorrect because processes focused solely on compliance oversimplify decision making and that does not necessarily help the larger cause.
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9. Which of the following statements is most likely accurate?

  • Option : C
  • Explanation : Statement A is incorrect because ethical firms enjoy lower costs as they are not subjected to investigations by regulators. Statement B is incorrect because when investors lose trust, they expect higher returns for their capital, which in turn increases the cost for borrowers.
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10. Which of the following is most likely a good example of ethical conduct?

  • Option : A
  • Explanation : Statement B is incorrect because ethical conduct requires a professional to go beyond what is legally required. Statement C is incorrect because a professional should minimize the risks of all stakeholders such as the employer, clients, family, and market participants.
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