Introduction
Preparing for the CFA Level 2 exam requires deep understanding of the Ethics and Professional Standards section, which carries significant weight in your score. This post is a complete practice resource that combines:
- ✅ 200 Multiple-Choice Questions (MCQs) with detailed explanations
- ✅ 30 Item Set Questions (10 vignette-style case studies) designed in the real CFA exam format
- ✅ Updated for the 2025 CFA curriculum
- ✅ Covers Code of Ethics, Standards of Professional Conduct, Fair Dealing, Integrity of Markets, Duties to Clients, Research Objectivity, Misconduct, and Conflicts of Interest
This all-in-one resource will help you master CFA Ethics, strengthen your exam readiness, and build confidence for test day.
📗 Section 1: CFA Level 2 Ethics – 30 Item Set Questions
👉 This section includes the 10 vignette-style case studies we developed (Item Set 1–10).
Each vignette will include 3 questions + answers with explanations (exact CFA format).
Item Set 1 – Insider Trading Case
Vignette:
Amir is a CFA charter holder working for Alpha Investments. He receives a confidential email from a company executive indicating that quarterly earnings will fall short of analyst expectations. Amir immediately informs his colleague Sana, who sells her holdings before the public announcement. Amir does not trade himself.
Questions:
- Amir’s conduct is most likely a violation of:
A. Misrepresentation
B. CFA Program Integrity
C. Material Nonpublic Information
D. Duties to Employer
Answer: C
Explanation: Amir disclosed material nonpublic info to another person, which is a violation.
- Sana’s trading action is:
A. A violation of market manipulation rules
B. A violation of material nonpublic information rules
C. Not a violation since Amir didn’t trade
D. Permissible under CFA Standards
Answer: B
Explanation: Acting on insider information is prohibited.
- If Amir had advised all clients equally after the announcement, this would best comply with:
A. Fair Dealing
B. Misrepresentation
C. Duties to Employer
D. Objectivity
Answer: A
Explanation: Equal communication of material information is required.
Item Set 2 – Performance Presentation
Vignette:
Sofia, CFA, prepares a marketing presentation that shows performance of her firm’s mutual funds. She excludes years with underperformance, highlights only outperforming funds, and uses projected returns as if they were actual past results.
Questions:
- Sofia’s omission of underperforming years is:
A. Not a violation if disclosed
B. Misrepresentation
C. Professionalism violation only
D. Permissible marketing
Answer: B
Explanation: Excluding poor performance is misrepresentation.
- Presenting projections as actual results is:
A. Permissible
B. Misrepresentation
C. Duties to Employer violation
D. Independence issue
Answer: B
Explanation: Projected returns cannot be presented as past results.
- Which of the following would bring Sofia into compliance?
A. Showing only outperforming funds
B. Disclosing projections separately
C. Presenting complete, accurate, and fair results
D. Using internal research only
Answer: C
Explanation: Full disclosure and accurate reporting is required.
Item Set 3 – Misrepresentation & Plagiarism
Vignette:
Liam, CFA, prepares a client presentation. To save time, he copies sections from another firm’s research report without attribution. He also claims that his fund has “guaranteed returns of 15% annually” based on historical performance. Later, a client notices that the copied sections were word-for-word from another report.
Questions:
- Copying research content without attribution is:
A. Acceptable if the content is factual
B. A violation of the misrepresentation standard
C. A violation of CFA exam integrity
D. Not a violation if the source is publicly available
✅ Answer: B
Explanation: Copy-pasting without attribution is plagiarism, a clear violation.
- Claiming “guaranteed returns” is:
A. Acceptable if historical results support the claim
B. A violation of misrepresentation
C. A violation of loyalty, prudence, and care
D. Not a violation since it is client-friendly
✅ Answer: B
Explanation: Performance guarantees cannot be made. Misrepresentation violation.
- The most appropriate corrective action Liam should have taken is:
A. Disclose the source in footnotes and avoid guarantees
B. Copy the report but reword it
C. Obtain permission from his employer
D. Keep the claim since it attracts investors
✅ Answer: A
Explanation: Attribution and avoiding guarantees is required.
Item Set 4 – Fair Dealing & Priority of Transactions
Vignette:
Sophia, CFA, is a research analyst who issues a “Buy” recommendation on a stock. Before releasing it to the public, she informs her friends, who trade immediately. After publication, her clients also start trading at higher prices. Separately, Sophia personally buys shares for her own account just before her firm issues recommendations.
Questions:
- Informing friends before public release is:
A. A violation of fair dealing
B. Not a violation if no harm occurs
C. Acceptable if she didn’t trade
D. A violation only of duties to employer
✅ Answer: A
Explanation: Material information must be distributed fairly to all clients.
- Sophia’s personal trades before recommendations are:
A. Permissible if disclosed
B. A violation of priority of transactions
C. Not a violation since clients still benefited
D. A violation only if she sold after the recommendation
✅ Answer: B
Explanation: Employees’ trades must not take precedence over client trades.
- To comply with CFA standards, Sophia should have:
A. Delayed client trades
B. Given clients and the market priority access
C. Informed her employer only
D. Disclosed trades to her friends
✅ Answer: B
Explanation: Client and market access must come before personal benefit.
Item Set 5 – Suitability & Fiduciary Duty
Vignette:
Daniel, CFA, manages portfolios for high-net-worth clients. One of his clients, Ms. Rivera, has a low risk tolerance and long-term goals. Daniel, however, strongly believes a new speculative biotech stock will “make huge gains.” He invests 30% of Ms. Rivera’s portfolio into the stock without consulting her. In another case, Daniel invests client funds into securities underwritten by his firm, but discloses this in a general statement in the firm’s marketing brochure.
Questions:
- Investing in the speculative biotech stock is:
A. Suitable because Daniel believes in strong returns
B. A violation of suitability and fiduciary duty
C. Acceptable if Ms. Rivera did not object
D. A violation only if the stock underperforms
✅ Answer: B
Explanation: Ignoring risk tolerance and client objectives breaches suitability and fiduciary duty.
- Investing in firm-underwritten securities with only a generic disclosure is:
A. Acceptable since disclosure exists
B. A violation of loyalty and disclosure standards
C. Not a violation if clients benefit
D. Permissible as long as Daniel invests in similar securities himself
✅ Answer: B
Explanation: Full, specific disclosure is required. Generic brochures are insufficient.
- The correct course of action for Daniel would have been:
A. Follow Ms. Rivera’s written IPS strictly
B. Make investments based only on firm strategy
C. Disclose conflicts only in annual reports
D. Invest without disclosure if benefits are clear
✅ Answer: A
Explanation: Portfolio must align with client’s IPS (Investment Policy Statement).
Item Set 6 – Professional Misconduct & Confidentiality
Vignette:
Maria, CFA, works in corporate finance. She discovers confidential merger information about a public company while advising her client. Excited, she tells her close friend about the deal, who then trades the stock. Separately, Maria has been under extreme stress and has been frequently intoxicated at work, making errors in financial models.
Questions:
- Sharing confidential merger information with her friend is:
A. Acceptable if Maria did not trade herself
B. A violation of confidentiality and material nonpublic information standards
C. Not a violation since her friend is not a client
D. A violation only if her firm loses money
✅ Answer: B
Explanation: Disclosing material nonpublic information is a violation.
- Working while intoxicated and making repeated mistakes is:
A. Not a violation if unintentional
B. Professional misconduct under the Code of Ethics
C. Acceptable if disclosed to employer
D. A violation only if clients complain
✅ Answer: B
Explanation: Impaired judgment and poor conduct constitute professional misconduct.
- To comply, Maria should have:
A. Maintained confidentiality and avoided impaired performance
B. Informed friends so they could be prepared
C. Allowed others to correct her mistakes
D. Resigned from her position immediately
✅ Answer: A
Explanation: Members must safeguard confidentiality and act professionally.
Item Set 7 – Conflicts of Interest & Priority of Transactions
Vignette:
Oliver, CFA, is an equity analyst. He recently received an allocation of IPO shares in a highly demanded stock. He purchased shares for his personal account before recommending the stock to his clients. Additionally, Oliver accepts tickets to exclusive sporting events from the company’s IR (Investor Relations) team.
Questions:
- Oliver’s personal purchase of IPO shares before clients is:
A. Acceptable if disclosed
B. A violation of priority of transactions
C. Permissible since it was a small allocation
D. Not a violation if clients later profited
✅ Answer: B
Explanation: Clients must always have priority in investment opportunities.
- Accepting tickets to exclusive sporting events is:
A. Acceptable if not excessive
B. A violation if the gifts impair objectivity
C. Acceptable since they were unsolicited
D. Not a violation if his firm approves
✅ Answer: B
Explanation: Gifts that compromise independence and objectivity are prohibited.
- Oliver should have:
A. Refrained from personal participation in IPO allocations ahead of clients
B. Accepted gifts without reporting
C. Disclosed gifts only annually
D. Prioritized his account since allocation was small
✅ Answer: A
Explanation: He must place client interests before his own.
Item Set 8 – Misrepresentation & Misconduct
Vignette:
Sophie, CFA, works for an investment advisory firm. To attract clients, she exaggerates her past portfolio returns by including “hypothetical back-tested” results as if they were actual performance. She also posts client testimonials on her website without disclosing that the clients received discounts on advisory fees. Separately, Sophie makes false claims about a competitor’s poor compliance practices.
Questions:
- Presenting back-tested results as actual performance is:
A. Acceptable marketing
B. A violation of misrepresentation standards
C. Permissible if clients ask for details later
D. Not a violation if returns are positive
✅ Answer: B
Explanation: Misrepresentation of performance is prohibited.
- Posting client testimonials without disclosure is:
A. Acceptable as long as testimonials are positive
B. A violation due to lack of transparency
C. Acceptable since testimonials are genuine
D. Not a violation if testimonials are short
✅ Answer: B
Explanation: Full disclosure of compensation or incentives is required.
- Making false claims about a competitor’s compliance practices is:
A. A violation of professionalism and misconduct standards
B. Acceptable competition
C. Permissible if based on opinion
D. Not a violation unless reported
✅ Answer: A
Explanation: False statements about competitors are prohibited misconduct.
Item Set 9 – Insider Trading & Fair Dealing
Vignette:
Emma, CFA, is a portfolio manager. A corporate insider at AlphaTech secretly tells Emma that the company will announce strong quarterly earnings tomorrow. Emma immediately buys AlphaTech shares for her personal account and later informs only her largest client about the news. She does not inform smaller clients.
Questions:
- Emma’s personal purchase of AlphaTech shares is:
A. Acceptable since she is an analyst
B. A violation due to use of material nonpublic information
C. Permissible if she reports to her supervisor
D. Not a violation if profits are small
✅ Answer: B
Explanation: Trading on material nonpublic information is strictly prohibited.
- Informing only her largest client is:
A. Acceptable client prioritization
B. A violation of fair dealing standards
C. Permissible under fiduciary duty
D. Acceptable if disclosed to firm compliance
✅ Answer: B
Explanation: Members must deal fairly and objectively with all clients.
- To act correctly, Emma should have:
A. Waited until public disclosure before acting
B. Traded only for her largest client
C. Reported the information to compliance and acted accordingly
D. Sold short instead of buying shares
✅ Answer: A
Explanation: She must not trade until the information is publicly available.
Item Set 10 – Research Integrity & Independence
Vignette:
Liam, CFA, covers the banking sector. His firm’s investment banking department pressures him to issue a “Buy” recommendation on a bank that is a potential IPO client. Liam reluctantly publishes the report with a positive rating, despite his independent analysis showing poor fundamentals. Additionally, Liam copies parts of another analyst’s report without citation.
Questions:
- Publishing a “Buy” recommendation under banking pressure is:
A. Acceptable if his firm benefits
B. A violation of independence and objectivity
C. Permissible since he disclosed conflicts
D. Not a violation if investors profit
✅ Answer: B
Explanation: Analysts must maintain independence and objectivity in research.
- Copying content from another analyst’s report without attribution is:
A. A violation of plagiarism standards
B. Acceptable if only small portions are copied
C. Not a violation if the other analyst works in the same firm
D. Permissible if rewritten in summary
✅ Answer: A
Explanation: Using others’ work without proper citation constitutes plagiarism.
- To comply with CFA standards, Liam should have:
A. Issued a neutral report
B. Refused to alter his recommendation under pressure
C. Copied the report since it was internal
D. Withheld his research entirely
✅ Answer: B
Explanation: Analysts must base research on independent judgment, not external pressure.
📘 CFA Level 2 Ethics MCQs (1–200) with Answers & Explanations
Question 1
Which of the following best describes the primary objective of the CFA Institute Code of Ethics?
A. To maximize financial returns for CFA members
B. To maintain market efficiency
C. To promote integrity, transparency, and professionalism in investment practice
D. To ensure compliance with local regulations only
Answer: C
Explanation: The Code of Ethics emphasizes integrity, transparency, and professionalism, going beyond mere compliance with laws.
Question 2
An analyst accepts concert tickets from a client worth $500. According to the Standards of Professional Conduct, this is:
A. Acceptable if disclosed to the employer
B. A violation regardless of disclosure
C. Acceptable without disclosure
D. Prohibited under all circumstances
Answer: A
Explanation: Modest gifts are allowed if disclosed. Excessive gifts that may compromise independence should be refused.
Question 3
An investment manager recommends a stock solely because of pressure from her firm’s largest client. This violates which Standard?
A. Fair Dealing
B. Loyalty, Prudence, and Care
C. Market Manipulation
D. Professional Misconduct
Answer: B
Explanation: Investment decisions must prioritize client interests, not external pressures.
Question 4
A CFA candidate exaggerates past performance in a marketing brochure. Which Standard is violated?
A. Misrepresentation
B. Loyalty to Employers
C. Diligence and Reasonable Basis
D. Duties to Clients
Answer: A
Explanation: Misrepresentation occurs when performance records, qualifications, or services are distorted.
Question 5
A portfolio manager uses client brokerage commissions to purchase research that benefits all clients. This practice is:
A. Always a violation
B. Permissible if disclosed to clients
C. Permissible without disclosure
D. Prohibited under CFA Code
Answer: B
Explanation: Soft dollar arrangements are acceptable if they benefit clients and are fully disclosed.
Question 6
An analyst prepares a research report without verifying critical data. This violates:
A. Misrepresentation
B. Diligence and Reasonable Basis
C. Independence and Objectivity
D. Duties to Clients
Answer: B
Explanation: Reports must be supported with sufficient research and diligence.
Question 7
A CFA charterholder shares client information with her spouse. This violates which Standard?
A. Loyalty, Prudence, and Care
B. Confidentiality
C. Professionalism
D. Conflicts of Interest
Answer: B
Explanation: Members must protect confidential information unless disclosure is required by law or client permits it.
Question 8
A portfolio manager promises guaranteed returns of 15% to clients. This is:
A. Permissible with disclosure
B. A violation of Misrepresentation
C. Ethical if based on historical averages
D. Acceptable if confirmed by the firm
Answer: B
Explanation: Guaranteeing returns is prohibited unless backed by government instruments.
Question 9
An analyst accepts paid travel to visit a company’s overseas operations. This is acceptable if:
A. It is modest and disclosed
B. It improves client service and independence is not compromised
C. The analyst informs CFA Institute
D. The payment is from a regulator
Answer: B
Explanation: Modest travel directly related to due diligence is allowed with disclosure.
Question 10
A supervisor fails to prevent unethical practices in his department. This violates:
A. Diligence and Reasonable Basis
B. Responsibilities of Supervisors
C. Market Manipulation
D. Duties to Employers
Answer: B
Explanation: Supervisors must ensure compliance systems are in place.
Question 11
An analyst knowingly spreads false rumors about a competitor’s financial health. This violates:
A. Fair Dealing
B. Market Manipulation
C. Misrepresentation
D. Independence
Answer: B
Explanation: Spreading false information to influence the market is manipulation.
Question 12
A CFA candidate states he “will be a CFA charterholder next year” after passing Level II. This is:
A. Acceptable
B. Misrepresentation
C. Permissible with disclosure
D. Professional Courtesy
Answer: B
Explanation: Candidates must not misrepresent the status; only actual charterholders may use “CFA”.
Question 13
An investment advisor must place trades in which order?
A. Employer, clients, self
B. Clients, employer, self
C. Employer, self, clients
D. Self, clients, employer
Answer: B
Explanation: Priority of transactions requires clients’ interests first.
Question 14
If local law permits insider trading but CFA Standards prohibit it, what should a charterholder do?
A. Follow local law
B. Follow CFA Standards
C. Follow firm policy
D. Seek client approval
Answer: B
Explanation: When in conflict, members must adhere to the stricter standard.
Question 15
An analyst discloses her firm’s conflict of interest in a research report. This is:
A. Optional
B. Required under CFA Standards
C. Violation of confidentiality
D. Prohibited practice
Answer: B
Explanation: Conflicts must be disclosed to maintain transparency.
Question 16
A portfolio manager trades ahead of client orders to benefit personally. This is a violation of:
A. Market Manipulation
B. Priority of Transactions
C. Fair Dealing
D. Duties to Employer
Answer: B
Explanation: Clients must always be given priority in trading.
Question 17
An analyst includes third-party research in his report without attribution. This is:
A. Permissible if accurate
B. A violation of Misrepresentation
C. Encouraged for efficiency
D. Ethical if disclosed verbally
Answer: B
Explanation: Failing to credit the source is plagiarism.
Question 18
A CFA member is arrested for tax fraud. Which Standard is violated?
A. Misconduct
B. Diligence and Reasonable Basis
C. Conflicts of Interest
D. Market Manipulation
Answer: A
Explanation: Misconduct includes dishonest or fraudulent acts, even outside the profession.
Question 19
A research analyst provides different recommendations to different clients at the same time. This violates:
A. Fair Dealing
B. Loyalty, Prudence, and Care
C. Professionalism
D. Independence and Objectivity
Answer: A
Explanation: Recommendations must be disseminated fairly and promptly.
Question 20
A charterholder outsources research but fails to review the quality. This violates:
A. Professional Misconduct
B. Diligence and Reasonable Basis
C. Independence and Objectivity
D. Fair Dealing
Answer: B
Explanation: Members must ensure the validity of third-party research before use.
Question 21
An employee accepts a lavish gift from a client for special treatment. This is a violation of:
A. Loyalty, Prudence, and Care
B. Independence and Objectivity
C. Duties to Employer
D. Market Manipulation
Answer: B
Explanation: Gifts must not compromise objectivity.
Question 22
A CFA charterholder knowingly uses outdated financial data in a research report. This is:
A. Ethical, if disclosed
B. A violation of Misrepresentation
C. Permissible under firm policy
D. Fair dealing
Answer: B
Explanation: Misrepresentation occurs when misleading or outdated information is presented.
Question 23
An analyst receives confidential client information that may affect security prices. He should:
A. Trade on the information
B. Share it with select clients
C. Maintain confidentiality
D. Report it to the media
Answer: C
Explanation: Confidential information must be preserved unless required by law.
Question 24
A portfolio manager selectively discloses performance data to attract investors. This violates:
A. Market Manipulation
B. Misrepresentation
C. Fair Dealing
D. Diligence
Answer: B
Explanation: Selective performance reporting misrepresents the truth.
Question 25
A CFA candidate posts exam questions online after the test. This violates:
A. Misrepresentation
B. CFA Program Integrity
C. Fair Dealing
D. Market Manipulation
Answer: B
Explanation: Sharing exam material violates the CFA Program’s integrity rules.
Question 26
An analyst executes personal trades before issuing a strong buy recommendation. This violates:
A. Market Manipulation
B. Priority of Transactions
C. Independence and Objectivity
D. Duties to Clients
Answer: B
Explanation: Clients must be given priority.
Question 27
A supervisor ignores compliance violations by subordinates. This violates:
A. Duties to Employer
B. Responsibilities of Supervisors
C. Professionalism
D. Misrepresentation
Answer: B
Explanation: Supervisors must ensure an adequate compliance system.
Question 28
An analyst exaggerates her experience in a résumé sent to clients. This is a violation of:
A. Misrepresentation
B. Independence and Objectivity
C. Conflicts of Interest
D. Professionalism
Answer: A
Explanation: Misrepresenting credentials is unethical.
Question 29
An analyst receives material non-public information but does not trade. He includes it in research recommendations. This is:
A. Ethical
B. Violation of Misrepresentation
C. Violation of Insider Trading prohibition
D. Professional courtesy
Answer: C
Explanation: Even indirect use of insider information is prohibited.
Question 30
A firm fails to keep records of client communications. This violates:
A. Duties to Clients
B. Professional Misconduct
C. Record Retention Standard
D. Market Manipulation
Answer: C
Explanation: Record retention is mandatory for compliance and accountability.
Question 31
A CFA charterholder refuses to disclose referral fees. This violates:
A. Duties to Employer
B. Disclosure of Conflicts
C. Confidentiality
D. Independence
Answer: B
Explanation: Referral fees must be disclosed to clients and employers.
Question 32
A research analyst refuses to cover a stock due to personal dislike of management. This violates:
A. Professionalism
B. Independence and Objectivity
C. Diligence and Reasonable Basis
D. Loyalty, Prudence, and Care
Answer: C
Explanation: Recommendations must be based on objective analysis, not personal bias.
Question 33
A portfolio manager makes an error that harms a client but hides it. This violates:
A. Misrepresentation
B. Loyalty, Prudence, and Care
C. Fair Dealing
D. Professionalism
Answer: B
Explanation: Managers must act with loyalty and disclose mistakes.
Question 34
An analyst uses firm resources to trade personal accounts. This violates:
A. Duties to Employer
B. Professionalism
C. Fair Dealing
D. Diligence
Answer: A
Explanation: Misuse of employer resources violates duties to employer.
Question 35
A CFA candidate advertises as “CFA certified.” This is:
A. Permissible
B. Misrepresentation
C. Professional courtesy
D. Ethical if clarified later
Answer: B
Explanation: The correct term is “CFA charterholder.”
Question 36
A charterholder provides selective recommendations only to high-fee clients first. This violates:
A. Fair Dealing
B. Independence
C. Conflicts of Interest
D. Duties to Employer
Answer: A
Explanation: All clients must be treated fairly.
Question 37
An investment manager discloses personal investments when they overlap with client securities. This is:
A. Required under Conflicts of Interest Standard
B. Optional
C. Misrepresentation
D. Violation of Loyalty Standard
Answer: A
Explanation: Conflicts must always be disclosed.
Question 38
An analyst releases a strong sell recommendation without supporting evidence. This violates:
A. Independence and Objectivity
B. Market Manipulation
C. Diligence and Reasonable Basis
D. Fair Dealing
Answer: C
Explanation: Recommendations must be based on thorough and sufficient research.
Question 39
A CFA charterholder invests client funds in risky securities without client consent. This violates:
A. Duties to Clients
B. Market Manipulation
C. Record Retention
D. Misrepresentation
Answer: A
Explanation: Investment must match client objectives and risk tolerance.
Question 40
A CFA candidate sits for the exam under someone else’s identity. This is a violation of:
A. CFA Program Integrity
B. Professionalism
C. Misrepresentation
D. Duties to Employer
Answer: A
Explanation: Identity fraud violates CFA Program rules.
Question 41
A research analyst knowingly issues false favorable reports to win business. This violates:
A. Fair Dealing
B. Misrepresentation
C. Independence and Objectivity
D. Diligence
Answer: B
Explanation: False or misleading reports are misrepresentation.
Question 42
A CFA member shares exam preparation material claiming it’s “official CFA Institute notes.” This is:
A. Ethical if true
B. Misrepresentation
C. Fair Dealing
D. Market Manipulation
Answer: B
Explanation: Misrepresentation of study material is prohibited.
Question 43
An analyst posts research reports on social media but delays sending them to clients. This violates:
A. Fair Dealing
B. Market Manipulation
C. Duties to Employer
D. Conflicts of Interest
Answer: A
Explanation: Clients must receive recommendations fairly and promptly.
Question 44
A charterholder fails to update outdated disclosures in a client agreement. This is:
A. Fair Dealing
B. Misrepresentation
C. Professional Misconduct
D. Duties to Clients
Answer: D
Explanation: Clients must be informed with updated and accurate disclosures.
Question 45
An employee discloses confidential firm strategies to a competitor. This violates:
A. Duties to Employer
B. Market Manipulation
C. Independence
D. Fair Dealing
Answer: A
Explanation: Confidential employer information must be protected.
Question 46
A CFA member refuses to follow compliance policies. This violates:
A. Professional Misconduct
B. Fair Dealing
C. Duties to Employer
D. Independence
Answer: A
Explanation: Members must follow applicable compliance procedures.
Question 47
An analyst exaggerates past performance in a sales pitch. This violates:
A. Misrepresentation
B. Duties to Clients
C. Market Manipulation
D. Fair Dealing
Answer: A
Explanation: Past performance must be reported accurately.
Question 48
A CFA charterholder provides advance notice of a downgrade to select clients. This violates:
A. Duties to Employer
B. Fair Dealing
C. Conflicts of Interest
D. Professionalism
Answer: B
Explanation: All clients must be treated fairly.
Question 49
An analyst receives inside information but places no trades. Instead, he advises clients to delay buying. This is:
A. Ethical since no trades occurred
B. Violation of Insider Trading prohibition
C. Permissible with disclosure
D. Fair dealing
Answer: B
Explanation: Even advising clients based on insider information is a violation.
Question 50
A CFA member knowingly provides inaccurate information to regulators. This violates:
A. Professionalism
B. Duties to Employer
C. Misrepresentation
D. Market Manipulation
Answer: A
Explanation: Members must not mislead regulators or other authorities.
Question 51
A CFA charterholder knowingly omits material information from a research report to make a stock appear attractive. This violates:
A. Fair Dealing
B. Misrepresentation
C. Independence and Objectivity
D. Duties to Clients
Answer: B
Explanation: Omitting material facts is a form of misrepresentation.
Question 52
An investment manager front-runs a client order by executing his personal trade first. This is a violation of:
A. Priority of Transactions
B. Professional Misconduct
C. Fair Dealing
D. Duties to Employer
Answer: A
Explanation: Client orders always have priority over personal trades.
Question 53
An analyst exaggerates expected returns in marketing material. This violates:
A. Misrepresentation
B. Professionalism
C. Market Manipulation
D. Fair Dealing
Answer: A
Explanation: Misstating or exaggerating future performance is prohibited.
Question 54
A CFA charterholder guarantees clients that investments will outperform the market. This violates:
A. Misrepresentation
B. Fair Dealing
C. Independence and Objectivity
D. Duties to Employer
Answer: A
Explanation: No one can guarantee investment performance.
Question 55
An analyst refuses to disclose referral fees received from third-party research providers. This violates:
A. Conflicts of Interest
B. Misrepresentation
C. Duties to Employer
D. Professionalism
Answer: A
Explanation: All referral fees must be disclosed.
Question 56
A CFA candidate misuses the CFA designation before passing all exams. This is:
A. Misrepresentation
B. Fair Dealing
C. Independence and Objectivity
D. Duties to Employer
Answer: A
Explanation: Candidates must not misrepresent their status.
Question 57
A firm selectively publishes favorable results of back-tested models. This violates:
A. Misrepresentation
B. Professionalism
C. Fair Dealing
D. Market Manipulation
Answer: A
Explanation: Omitting poor results misleads investors.
Question 58
An investment manager ignores client risk tolerance when constructing a portfolio. This violates:
A. Duties to Clients
B. Independence and Objectivity
C. Misrepresentation
D. Professionalism
Answer: A
Explanation: Managers must act with loyalty and prudence toward clients.
Question 59
An analyst executes a trade based on insider information obtained from a corporate insider. This violates:
A. Fair Dealing
B. Independence
C. Material Non-Public Information prohibition
D. Duties to Employer
Answer: C
Explanation: Trading on insider information is strictly prohibited.
Question 60
A CFA member refuses to cooperate with a CFA Institute investigation. This violates:
A. Misrepresentation
B. Professional Misconduct
C. Duties to Employer
D. Fair Dealing
Answer: B
Explanation: Members must cooperate with professional investigations.
Question 61
A charterholder provides incomplete disclosures about conflicts of interest. This violates:
A. Professionalism
B. Duties to Clients
C. Disclosure of Conflicts
D. Market Manipulation
Answer: C
Explanation: Full disclosure of conflicts is mandatory.
Question 62
A research analyst bases a recommendation solely on rumors. This violates:
A. Diligence and Reasonable Basis
B. Professionalism
C. Fair Dealing
D. Duties to Employer
Answer: A
Explanation: Research must be based on reasonable and adequate evidence.
Question 63
A CFA member manipulates trading volume to create artificial demand. This violates:
A. Market Manipulation
B. Professional Misconduct
C. Misrepresentation
D. Fair Dealing
Answer: A
Explanation: Artificially inflating prices or volume is prohibited.
Question 64
A CFA charterholder provides investment advice outside his area of competence. This violates:
A. Professionalism
B. Duties to Clients
C. Misrepresentation
D. Fair Dealing
Answer: B
Explanation: Advisers must act within their professional competence.
Question 65
A firm advertises compliance with GIPS but does not actually comply. This is:
A. Professionalism
B. Misrepresentation
C. Duties to Employer
D. Fair Dealing
Answer: B
Explanation: Misstating GIPS compliance is misrepresentation.
Question 66
An analyst intentionally misprices securities to benefit a client. This violates:
A. Duties to Clients
B. Fair Dealing
C. Professionalism
D. Market Manipulation
Answer: D
Explanation: Artificial pricing manipulates the market.
Question 67
A CFA member continues to promote himself as a charterholder after non-payment of dues. This violates:
A. Duties to Employer
B. Misrepresentation
C. Professionalism
D. Independence
Answer: B
Explanation: Only active members may use the designation.
Question 68
A portfolio manager withholds negative information about an investment product from clients. This violates:
A. Professionalism
B. Fair Dealing
C. Misrepresentation
D. Duties to Clients
Answer: D
Explanation: Clients must receive full and accurate disclosure.
Question 69
A CFA charterholder posts confidential client information on social media. This violates:
A. Confidentiality Standard
B. Duties to Employer
C. Market Manipulation
D. Fair Dealing
Answer: A
Explanation: Client confidentiality must be preserved.
Question 70
An analyst discloses confidential information when required by law. This is:
A. A violation
B. Ethical and permitted
C. Misrepresentation
D. Market Manipulation
Answer: B
Explanation: Disclosure is permitted when required by law.
Question 71
An investment manager knowingly invests in illegal securities for clients. This violates:
A. Duties to Clients
B. Professionalism
C. Independence
D. Misrepresentation
Answer: B
Explanation: Members must comply with laws and regulations.
Question 72
A CFA charterholder’s firm lacks a compliance system. He fails to establish one. This violates:
A. Responsibilities of Supervisors
B. Professionalism
C. Duties to Employer
D. Market Manipulation
Answer: A
Explanation: Supervisors must implement compliance systems.
Question 73
A CFA member promotes performance numbers without net-of-fee disclosures. This violates:
A. Misrepresentation
B. Fair Dealing
C. Professionalism
D. Market Manipulation
Answer: A
Explanation: Incomplete performance disclosure is misleading.
Question 74
A portfolio manager selectively executes client trades based on account size. This violates:
A. Duties to Employer
B. Fair Dealing
C. Independence
D. Professionalism
Answer: B
Explanation: All clients must be treated fairly regardless of size.
Question 75
An analyst presents outdated credentials to clients. This violates:
A. Professionalism
B. Misrepresentation
C. Duties to Employer
D. Fair Dealing
Answer: B
Explanation: Credentials must be accurate and up to date.
Question 76
A CFA charterholder agrees to accept performance-based compensation without disclosure. This violates:
A. Duties to Employer
B. Conflicts of Interest
C. Professionalism
D. Fair Dealing
Answer: B
Explanation: Compensation arrangements must be disclosed.
Question 77
An analyst publishes plagiarized research as her own. This is:
A. Fair Dealing
B. Professionalism
C. Misrepresentation
D. Duties to Employer
Answer: C
Explanation: Plagiarism is a form of misrepresentation.
Question 78
A CFA charterholder knowingly understates risks in investment products. This violates:
A. Duties to Clients
B. Professionalism
C. Misrepresentation
D. Fair Dealing
Answer: C
Explanation: All material risks must be disclosed accurately.
Question 79
A supervisor allows a subordinate to trade on inside information. This violates:
A. Duties to Employer
B. Responsibilities of Supervisors
C. Market Manipulation
D. Fair Dealing
Answer: B
Explanation: Supervisors must prevent violations.
Question 80
An investment professional manipulates benchmarks to enhance performance results. This violates:
A. Misrepresentation
B. Professionalism
C. Market Manipulation
D. Duties to Employer
Answer: C
Explanation: Manipulating benchmarks is prohibited.
Question 81
An analyst provides selective access to research updates. This violates:
A. Fair Dealing
B. Professionalism
C. Duties to Employer
D. Independence
Answer: A
Explanation: Equal access to research is required.
Question 82
A CFA charterholder lies about holding a PhD in marketing materials. This violates:
A. Professionalism
B. Misrepresentation
C. Duties to Employer
D. Fair Dealing
Answer: B
Explanation: False claims about qualifications are misrepresentation.
Question 83
An analyst publishes favorable research to gain investment banking business. This violates:
A. Independence and Objectivity
B. Misrepresentation
C. Professionalism
D. Fair Dealing
Answer: A
Explanation: Research must remain independent and objective.
Question 84
A CFA candidate falsely claims to be a charterholder. This is:
A. Professionalism
B. Misrepresentation
C. Duties to Employer
D. Fair Dealing
Answer: B
Explanation: Only charterholders may use the designation.
Question 85
A firm fails to monitor personal trading of employees. This violates:
A. Professionalism
B. Responsibilities of Supervisors
C. Fair Dealing
D. Misrepresentation
Answer: B
Explanation: Supervisors must ensure compliance monitoring.
Question 86
A portfolio manager hides errors in client statements. This violates:
A. Duties to Clients
B. Misrepresentation
C. Professionalism
D. Market Manipulation
Answer: A
Explanation: Clients must receive accurate statements.
Question 87
An analyst engages in pump-and-dump schemes. This violates:
A. Misrepresentation
B. Professionalism
C. Market Manipulation
D. Duties to Employer
Answer: C
Explanation: Pump-and-dump is market manipulation.
Question 88
A CFA member publishes client performance without client consent. This violates:
A. Confidentiality
B. Professionalism
C. Duties to Employer
D. Fair Dealing
Answer: A
Explanation: Client consent is required before disclosure.
Question 89
An analyst publishes recommendations without proper research. This violates:
A. Diligence and Reasonable Basis
B. Professionalism
C. Misrepresentation
D. Fair Dealing
Answer: A
Explanation: Reports must be based on proper analysis.
Question 90
A CFA charterholder provides early access to earnings estimates to select clients. This violates:
A. Fair Dealing
B. Professionalism
C. Duties to Employer
D. Independence
Answer: A
Explanation: Selective dissemination violates Fair Dealing.
Question 91
An investment professional trades using material nonpublic government data. This violates:
A. Professionalism
B. Market Manipulation
C. Duties to Employer
D. Insider Trading prohibition
Answer: D
Explanation: Using material nonpublic government information is insider trading.
Question 92
A CFA charterholder advertises guaranteed minimum returns. This violates:
A. Misrepresentation
B. Duties to Clients
C. Professionalism
D. Fair Dealing
Answer: A
Explanation: Guarantees are misleading and unethical.
Question 93
An analyst fails to disclose ownership in a stock she recommends. This violates:
A. Conflicts of Interest
B. Misrepresentation
C. Duties to Employer
D. Professionalism
Answer: A
Explanation: Conflicts must be fully disclosed.
Question 94
A CFA candidate posts exam questions online after the test. This violates:
A. CFA Program Integrity
B. Fair Dealing
C. Misrepresentation
D. Market Manipulation
Answer: A
Explanation: Sharing exam content violates CFA Program rules.
Question 95
An analyst claims investment results are “risk-free.” This violates:
A. Professionalism
B. Misrepresentation
C. Duties to Clients
D. Fair Dealing
Answer: B
Explanation: All investments carry risk; claiming otherwise is misrepresentation.
Question 96
A CFA member fails to disclose a bonus for promoting a certain product. This violates:
A. Conflicts of Interest
B. Misrepresentation
C. Duties to Employer
D. Professionalism
Answer: A
Explanation: Incentives and bonuses must be disclosed.
Question 97
An investment manager uses client assets to pay firm expenses. This violates:
A. Duties to Clients
B. Professionalism
C. Misrepresentation
D. Fair Dealing
Answer: A
Explanation: Client assets must only be used for client benefit.
Question 98
A CFA candidate provides forged academic transcripts to employers. This violates:
A. Professionalism
B. Misrepresentation
C. Duties to Employer
D. Fair Dealing
Answer: B
Explanation: Forged documents are misrepresentation.
Question 99
An analyst uses nonpublic merger information to recommend stock purchases. This violates:
A. Market Manipulation
B. Insider Trading prohibition
C. Misrepresentation
D. Professionalism
Answer: B
Explanation: Insider information must not be used for recommendations.
Question 100
A CFA charterholder fails to disclose a disciplinary action to CFA Institute. This violates:
A. Professionalism
B. Misrepresentation
C. Duties to Employer
D. Fair Dealing
Answer: A
Explanation: Members must disclose disciplinary actions.
Question 101
A CFA charterholder promotes investment opportunities without disclosing his financial interest. This violates:
A. Conflicts of Interest
B. Misrepresentation
C. Professionalism
D. Duties to Employer
Answer: A
Explanation: All financial interests must be fully disclosed to avoid conflicts.
Question 102
An analyst selectively provides favorable research reports to premium clients first. This violates:
A. Fair Dealing
B. Duties to Clients
C. Misrepresentation
D. Professionalism
Answer: A
Explanation: Equal treatment of all clients is essential under Fair Dealing.
Question 103
A CFA member shares client trading strategies with friends for personal gain. This violates:
A. Confidentiality
B. Misrepresentation
C. Fair Dealing
D. Duties to Employer
Answer: A
Explanation: Client information must remain confidential.
Question 104
A research analyst fails to perform adequate due diligence before issuing a recommendation. This violates:
A. Duties to Clients
B. Professionalism
C. Diligence and Reasonable Basis
D. Fair Dealing
Answer: C
Explanation: Investment recommendations must be backed by thorough research.
Question 105
An investment manager manipulates performance records to secure new clients. This is:
A. Misrepresentation
B. Professionalism
C. Market Manipulation
D. Duties to Employer
Answer: A
Explanation: Altering performance results misrepresents facts.
Question 106
A CFA candidate posts details of his exam experience on social media. This violates:
A. CFA Program Integrity
B. Fair Dealing
C. Duties to Employer
D. Professionalism
Answer: A
Explanation: Candidates must not disclose exam content or experiences.
Question 107
A CFA charterholder gives preferential treatment to family accounts. This violates:
A. Duties to Clients
B. Fair Dealing
C. Professionalism
D. Market Manipulation
Answer: B
Explanation: All clients must be treated fairly without favoritism.
Question 108
A CFA charterholder fails to disclose referral fees received from recommending outside services. This violates:
A. Professionalism
B. Conflicts of Interest
C. Misrepresentation
D. Duties to Employer
Answer: B
Explanation: Referral fees must be fully disclosed to clients and employers.
Question 109
A firm advertises that it is “CFA Institute approved” for investment services. This violates:
A. Misrepresentation
B. Professionalism
C. Duties to Clients
D. Fair Dealing
Answer: A
Explanation: CFA Institute does not endorse firms; this is misrepresentation.
Question 110
A CFA charterholder refuses to comply with local securities regulations. This violates:
A. Duties to Clients
B. Professionalism
C. Misrepresentation
D. Market Manipulation
Answer: B
Explanation: Members must comply with all applicable laws and regulations.
Question 111
A CFA charterholder charges clients excessive fees without disclosure. This violates:
A. Duties to Clients
B. Professionalism
C. Conflicts of Interest
D. Misrepresentation
Answer: A
Explanation: Fees must be fair and disclosed in advance.
Question 112
An analyst copies charts from another firm’s report without attribution. This is:
A. Professionalism
B. Misrepresentation
C. Duties to Employer
D. Fair Dealing
Answer: B
Explanation: Using others’ work without credit is plagiarism.
Question 113
A CFA member delays execution of small client trades to favor larger clients. This violates:
A. Professionalism
B. Fair Dealing
C. Duties to Employer
D. Market Manipulation
Answer: B
Explanation: All clients must have equal execution priority.
Question 114
A portfolio manager recommends a fund without analyzing its risks. This violates:
A. Misrepresentation
B. Duties to Clients
C. Diligence and Reasonable Basis
D. Professionalism
Answer: C
Explanation: Recommendations must be supported by adequate analysis.
Question 115
A CFA candidate falsely claims to have passed all CFA exams. This is:
A. Misrepresentation
B. Professionalism
C. Duties to Employer
D. Fair Dealing
Answer: A
Explanation: Falsely claiming credentials is misrepresentation.
Question 116
A CFA charterholder makes political contributions to influence investment decisions. This violates:
A. Independence and Objectivity
B. Misrepresentation
C. Fair Dealing
D. Duties to Employer
Answer: A
Explanation: Objectivity must be maintained without improper influence.
Question 117
A CFA member manipulates benchmarks to create favorable relative performance. This violates:
A. Market Manipulation
B. Misrepresentation
C. Professionalism
D. Duties to Employer
Answer: B
Explanation: Altering benchmarks is misrepresentation.
Question 118
A research analyst knowingly issues a false report to satisfy management. This violates:
A. Professionalism
B. Misrepresentation
C. Independence and Objectivity
D. Duties to Employer
Answer: C
Explanation: Analysts must remain independent in their recommendations.
Question 119
A CFA charterholder ignores client investment guidelines to chase higher returns. This violates:
A. Duties to Clients
B. Professionalism
C. Fair Dealing
D. Misrepresentation
Answer: A
Explanation: Managers must respect client objectives and constraints.
Question 120
A CFA member releases insider information at a social gathering. This violates:
A. Confidentiality
B. Insider Trading prohibition
C. Fair Dealing
D. Duties to Employer
Answer: B
Explanation: Sharing material nonpublic information is prohibited.
Question 121
A supervisor fails to monitor staff activities, resulting in client harm. This violates:
A. Professionalism
B. Responsibilities of Supervisors
C. Fair Dealing
D. Misrepresentation
Answer: B
Explanation: Supervisors must ensure compliance through oversight.
Question 122
A CFA charterholder fails to disclose past disciplinary actions to clients. This violates:
A. Professionalism
B. Misrepresentation
C. Conflicts of Interest
D. Duties to Employer
Answer: A
Explanation: Full disclosure of disciplinary history is required.
Question 123
A CFA member manipulates stock prices through false media statements. This is:
A. Misrepresentation
B. Market Manipulation
C. Professionalism
D. Fair Dealing
Answer: B
Explanation: Publishing false information to move markets is manipulation.
Question 124
An analyst promotes investment returns using gross-of-fees performance only. This violates:
A. Misrepresentation
B. Professionalism
C. Duties to Clients
D. Conflicts of Interest
Answer: A
Explanation: Omitting net-of-fee results misleads investors.
Question 125
A CFA candidate is caught cheating during the exam. This violates:
A. Professionalism
B. CFA Program Integrity
C. Fair Dealing
D. Misrepresentation
Answer: B
Explanation: Cheating violates CFA Program Integrity.
Question 126
A CFA charterholder accepts lavish gifts for favorable coverage. This violates:
A. Independence and Objectivity
B. Misrepresentation
C. Professionalism
D. Duties to Employer
Answer: A
Explanation: Accepting gifts compromises independence.
Question 127
A CFA member hides conflicts of interest in investment recommendations. This violates:
A. Duties to Employer
B. Professionalism
C. Disclosure of Conflicts
D. Market Manipulation
Answer: C
Explanation: Conflicts must always be disclosed clearly.
Question 128
A portfolio manager misleads clients by projecting unrealistic returns. This violates:
A. Misrepresentation
B. Professionalism
C. Duties to Clients
D. Fair Dealing
Answer: A
Explanation: Overstating performance expectations is misrepresentation.
Question 129
A CFA candidate uses the CFA logo improperly in job applications. This is:
A. Misrepresentation
B. Professionalism
C. Fair Dealing
D. Duties to Employer
Answer: A
Explanation: Unauthorized use of CFA marks is misrepresentation.
Question 130
A CFA charterholder provides selective trading tips to close associates. This violates:
A. Fair Dealing
B. Professionalism
C. Misrepresentation
D. Duties to Employer
Answer: A
Explanation: All clients must receive equal treatment.
Question 131
A CFA member manipulates valuation models to inflate earnings. This violates:
A. Misrepresentation
B. Professionalism
C. Duties to Employer
D. Market Manipulation
Answer: A
Explanation: Altering models for false reporting is misrepresentation.
Question 132
An analyst promotes a fund while secretly receiving commissions. This violates:
A. Conflicts of Interest
B. Professionalism
C. Duties to Employer
D. Misrepresentation
Answer: A
Explanation: Commissions and incentives must be disclosed.
Question 133
A CFA charterholder does not implement a compliance system despite repeated violations. This violates:
A. Responsibilities of Supervisors
B. Professionalism
C. Misrepresentation
D. Fair Dealing
Answer: A
Explanation: Supervisors must establish and enforce compliance.
Question 134
A CFA member issues research reports without adequate support. This violates:
A. Diligence and Reasonable Basis
B. Professionalism
C. Fair Dealing
D. Misrepresentation
Answer: A
Explanation: Recommendations require reasonable evidence.
Question 135
A CFA candidate exaggerates his level of investment experience. This violates:
A. Professionalism
B. Misrepresentation
C. Duties to Employer
D. Fair Dealing
Answer: B
Explanation: Misstating experience is misrepresentation.
Question 136
A CFA charterholder deliberately misclassifies risky securities as low-risk. This violates:
A. Misrepresentation
B. Professionalism
C. Duties to Clients
D. Market Manipulation
Answer: A
Explanation: Misstating risk levels is misrepresentation.
Question 137
A CFA member manipulates order execution to increase firm profits over clients. This violates:
A. Duties to Clients
B. Professionalism
C. Fair Dealing
D. Misrepresentation
Answer: A
Explanation: Client interests must come first.
Question 138
An analyst selectively deletes poor-performing data in a report. This violates:
A. Misrepresentation
B. Professionalism
C. Fair Dealing
D. Market Manipulation
Answer: A
Explanation: Omitting unfavorable results is misrepresentation.
Question 139
A CFA candidate posts detailed solutions of exam questions online. This violates:
A. CFA Program Integrity
B. Professionalism
C. Duties to Employer
D. Fair Dealing
Answer: A
Explanation: Sharing exam content breaches CFA Program rules.
Question 140
A CFA charterholder hides legal investigations from his firm and clients. This violates:
A. Misrepresentation
B. Professionalism
C. Duties to Employer
D. Fair Dealing
Answer: A
Explanation: Material legal matters must be disclosed.
Question 141
A CFA member manipulates spreads in trading to create artificial profits. This violates:
A. Market Manipulation
B. Professionalism
C. Duties to Clients
D. Misrepresentation
Answer: A
Explanation: Artificial spread manipulation distorts markets.
Question 142
A CFA candidate claims to be a “future charterholder” in marketing. This violates:
A. Misrepresentation
B. Professionalism
C. Duties to Employer
D. Fair Dealing
Answer: A
Explanation: Candidates cannot imply guaranteed CFA designation.
Question 143
A CFA charterholder recommends securities in which he has undisclosed ownership. This violates:
A. Conflicts of Interest
B. Misrepresentation
C. Professionalism
D. Fair Dealing
Answer: A
Explanation: Ownership stakes must be disclosed.
Question 144
An analyst issues glowing reports under pressure from investment banking clients. This violates:
A. Independence and Objectivity
B. Misrepresentation
C. Fair Dealing
D. Duties to Employer
Answer: A
Explanation: Analysts must remain independent in recommendations.
Question 145
A CFA member uses outdated financial statements in valuation reports. This violates:
A. Misrepresentation
B. Professionalism
C. Duties to Employer
D. Fair Dealing
Answer: A
Explanation: Using outdated data misrepresents analysis.
Question 146
A CFA candidate lies about work experience in CFA Program enrollment. This is:
A. Misrepresentation
B. Professionalism
C. Duties to Employer
D. Fair Dealing
Answer: A
Explanation: Work experience must be honestly represented.
Question 147
A CFA member hides losses from clients to protect firm reputation. This violates:
A. Duties to Clients
B. Misrepresentation
C. Professionalism
D. Fair Dealing
Answer: A
Explanation: Clients must receive truthful and complete information.
Question 148
An analyst manipulates peer group selection to make performance look superior. This violates:
A. Misrepresentation
B. Fair Dealing
C. Duties to Employer
D. Professionalism
Answer: A
Explanation: Misleading benchmarks is misrepresentation.
Question 149
A CFA candidate sells mock CFA exam papers as real exams. This violates:
A. Misrepresentation
B. CFA Program Integrity
C. Professionalism
D. Duties to Employer
Answer: B
Explanation: Selling exam content violates CFA rules.
Question 150
A CFA charterholder fabricates academic research to gain credibility. This violates:
A. Misrepresentation
B. Professionalism
C. Duties to Employer
D. Fair Dealing
Answer: A
Explanation: Fabricating research is a clear case of misrepresentation.
Question 151
A CFA charterholder recommends a stock solely because he owns a large position. This violates:
A. Duties to Clients
B. Conflicts of Interest
C. Professionalism
D. Fair Dealing
Answer: B
Explanation: Personal holdings must be disclosed; undisclosed self-benefit creates a conflict.
Question 152
An analyst misleads clients by only highlighting best-case scenarios. This violates:
A. Misrepresentation
B. Fair Dealing
C. Duties to Clients
D. Professionalism
Answer: A
Explanation: Omitting risks or downside cases misrepresents investment suitability.
Question 153
A CFA candidate bribes a proctor to obtain exam answers. This violates:
A. Professionalism
B. CFA Program Integrity
C. Duties to Employer
D. Misrepresentation
Answer: B
Explanation: Bribery is a direct breach of CFA Program rules.
Question 154
A portfolio manager recommends securities to clients while receiving undisclosed kickbacks. This violates:
A. Conflicts of Interest
B. Misrepresentation
C. Professionalism
D. Duties to Employer
Answer: A
Explanation: Referral or incentive fees must be disclosed.
Question 155
A CFA member falsifies a degree in job applications. This is:
A. Misrepresentation
B. Professionalism
C. Duties to Employer
D. Fair Dealing
Answer: A
Explanation: Claiming false credentials is misrepresentation.
Question 156
An analyst leaks client portfolio strategies to competitors. This violates:
A. Confidentiality
B. Fair Dealing
C. Professionalism
D. Duties to Employer
Answer: A
Explanation: Client information must always remain confidential.
Question 157
A CFA member front-runs client trades to benefit his own account. This violates:
A. Fair Dealing
B. Duties to Clients
C. Professionalism
D. Market Manipulation
Answer: B
Explanation: Clients’ interests must always take priority over personal trades.
Question 158
A CFA candidate plagiarizes a research report for submission. This violates:
A. Misrepresentation
B. Professionalism
C. Duties to Employer
D. CFA Program Integrity
Answer: A
Explanation: Plagiarism is a clear form of misrepresentation.
Question 159
An analyst accepts inside information but does not act on it. This is:
A. Still a violation
B. Not a violation
C. A violation only if acted upon
D. A violation only if disclosed
Answer: A
Explanation: Possession of material nonpublic information itself is a violation.
Question 160
A CFA charterholder selectively presents past performance without full disclosure. This violates:
A. Misrepresentation
B. Duties to Clients
C. Professionalism
D. Fair Dealing
Answer: A
Explanation: Performance presentation must be complete and not cherry-picked.
Question 161
A CFA candidate pays someone to sit the exam on his behalf. This violates:
A. CFA Program Integrity
B. Professionalism
C. Duties to Employer
D. Misrepresentation
Answer: A
Explanation: Impersonation is strictly prohibited by CFA rules.
Question 162
A CFA member ignores laws of the host country, claiming home country laws are sufficient. This violates:
A. Professionalism
B. Duties to Clients
C. Misrepresentation
D. Market Manipulation
Answer: A
Explanation: CFA members must follow the stricter of local law, home law, or CFA standards.
Question 163
An investment manager allocates the most profitable trades to his personal account. This violates:
A. Fair Dealing
B. Duties to Clients
C. Professionalism
D. Misrepresentation
Answer: B
Explanation: Allocating profitable trades away from clients breaches fiduciary duty.
Question 164
A CFA charterholder presents simulated results as if they were actual client results. This violates:
A. Misrepresentation
B. Fair Dealing
C. Duties to Employer
D. Professionalism
Answer: A
Explanation: Misrepresenting hypothetical performance as real is misleading.
Question 165
An analyst accepts excessive gifts from a company being covered. This violates:
A. Independence and Objectivity
B. Duties to Employer
C. Misrepresentation
D. Fair Dealing
Answer: A
Explanation: Excessive gifts impair independence.
Question 166
A CFA candidate copies exam prep content without attribution. This is:
A. Misrepresentation
B. Professionalism
C. Duties to Employer
D. CFA Program Integrity
Answer: A
Explanation: Using others’ work without credit is plagiarism.
Question 167
A CFA member with a criminal conviction fails to disclose it to CFA Institute. This violates:
A. Professionalism
B. Misrepresentation
C. Fair Dealing
D. Duties to Employer
Answer: A
Explanation: Disclosure of criminal or regulatory issues is required.
Question 168
An analyst manipulates valuation assumptions to favor management’s goals. This violates:
A. Independence and Objectivity
B. Misrepresentation
C. Duties to Employer
D. Fair Dealing
Answer: A
Explanation: Analysts must remain independent despite pressure.
Question 169
A CFA charterholder fabricates client testimonials for marketing purposes. This violates:
A. Misrepresentation
B. Professionalism
C. Duties to Employer
D. Fair Dealing
Answer: A
Explanation: Fake testimonials are misrepresentation.
Question 170
A CFA candidate leaks CFA exam questions to prep providers. This violates:
A. CFA Program Integrity
B. Professionalism
C. Duties to Employer
D. Fair Dealing
Answer: A
Explanation: Sharing CFA exam content is prohibited.
Question 171
A CFA member issues research reports without disclosing reliance on third-party sources. This violates:
A. Misrepresentation
B. Professionalism
C. Duties to Employer
D. Fair Dealing
Answer: A
Explanation: Not citing third-party sources is misrepresentation.
Question 172
A CFA charterholder avoids compliance procedures because they reduce profits. This violates:
A. Professionalism
B. Duties to Employer
C. Fair Dealing
D. Conflicts of Interest
Answer: A
Explanation: Compliance with regulations and codes is mandatory.
Question 173
A CFA member misprices assets intentionally to benefit preferred clients. This violates:
A. Fair Dealing
B. Misrepresentation
C. Duties to Clients
D. Professionalism
Answer: C
Explanation: Clients must be treated fairly and honestly in valuations.
Question 174
A CFA charterholder omits disclosure of consulting fees when recommending a fund. This violates:
A. Conflicts of Interest
B. Misrepresentation
C. Duties to Clients
D. Professionalism
Answer: A
Explanation: Consulting or referral fees must be disclosed.
Question 175
An analyst recommends stocks to clients using outdated research. This violates:
A. Diligence and Reasonable Basis
B. Professionalism
C. Misrepresentation
D. Fair Dealing
Answer: A
Explanation: Research must be based on current, reliable data.
Question 176
A CFA candidate steals mock exam answers from a prep provider. This violates:
A. Misrepresentation
B. CFA Program Integrity
C. Professionalism
D. Duties to Employer
Answer: B
Explanation: Stealing prep materials violates CFA Program rules.
Question 177
A CFA member promotes guaranteed returns in equity markets. This violates:
A. Misrepresentation
B. Duties to Clients
C. Fair Dealing
D. Professionalism
Answer: A
Explanation: Guaranteeing returns in volatile markets is false representation.
Question 178
A CFA charterholder manipulates index inclusion criteria to benefit a client. This violates:
A. Market Manipulation
B. Misrepresentation
C. Professionalism
D. Duties to Employer
Answer: A
Explanation: Altering benchmarks for client benefit is manipulation.
Question 179
A CFA member omits disclosure of political donations influencing research. This violates:
A. Independence and Objectivity
B. Misrepresentation
C. Duties to Employer
D. Fair Dealing
Answer: A
Explanation: Undisclosed political ties impair objectivity.
Question 180
A CFA charterholder delays negative reports to avoid upsetting firm executives. This violates:
A. Professionalism
B. Misrepresentation
C. Independence and Objectivity
D. Duties to Employer
Answer: C
Explanation: Reports must remain unbiased and independent.
Question 181
A CFA member fabricates job titles in order to secure clients. This violates:
A. Misrepresentation
B. Duties to Employer
C. Professionalism
D. Fair Dealing
Answer: A
Explanation: False titles are misrepresentation.
Question 182
A CFA charterholder hides underperformance by using inappropriate benchmarks. This violates:
A. Misrepresentation
B. Professionalism
C. Duties to Clients
D. Fair Dealing
Answer: A
Explanation: Misleading benchmark use is misrepresentation.
Question 183
An analyst withholds downgrade recommendations to maintain good corporate relations. This violates:
A. Independence and Objectivity
B. Professionalism
C. Misrepresentation
D. Duties to Employer
Answer: A
Explanation: Analysts must remain independent in issuing ratings.
Question 184
A CFA candidate uses “CFA certified” on his resume. This violates:
A. Misrepresentation
B. CFA Program Integrity
C. Duties to Employer
D. Fair Dealing
Answer: A
Explanation: The correct designation is “CFA charterholder.”
Question 185
A CFA charterholder offers selective insights in exchange for side payments. This violates:
A. Fair Dealing
B. Conflicts of Interest
C. Professionalism
D. Misrepresentation
Answer: A
Explanation: All clients must be treated equally; side deals are unfair.
Question 186
A CFA member conceals regulatory fines from clients. This violates:
A. Professionalism
B. Misrepresentation
C. Duties to Clients
D. Fair Dealing
Answer: A
Explanation: Regulatory issues must be disclosed to maintain integrity.
Question 187
An analyst publishes favorable research without examining company fundamentals. This violates:
A. Diligence and Reasonable Basis
B. Misrepresentation
C. Professionalism
D. Fair Dealing
Answer: A
Explanation: Research must be well-supported by analysis.
Question 188
A CFA charterholder guarantees future returns to clients. This violates:
A. Misrepresentation
B. Duties to Clients
C. Fair Dealing
D. Professionalism
Answer: A
Explanation: Future investment performance cannot be guaranteed.
Question 189
A CFA candidate shares login credentials for CFA exam prep materials. This violates:
A. CFA Program Integrity
B. Misrepresentation
C. Professionalism
D. Duties to Employer
Answer: A
Explanation: Sharing CFA program materials is prohibited.
Question 190
A CFA member manipulates models to align with desired valuations. This violates:
A. Misrepresentation
B. Professionalism
C. Fair Dealing
D. Duties to Employer
Answer: A
Explanation: Altering models to mislead is misrepresentation.
Question 191
An analyst deletes poor performance years from client presentations. This violates:
A. Misrepresentation
B. Professionalism
C. Duties to Clients
D. Fair Dealing
Answer: A
Explanation: Performance reporting must be complete and accurate.
Question 192
A CFA charterholder conceals external compensation arrangements. This violates:
A. Conflicts of Interest
B. Misrepresentation
C. Duties to Employer
D. Professionalism
Answer: A
Explanation: All compensation arrangements must be disclosed.
Question 193
A CFA member knowingly issues a false rating to satisfy a large client. This violates:
A. Independence and Objectivity
B. Misrepresentation
C. Duties to Employer
D. Professionalism
Answer: A
Explanation: Analysts must remain objective and independent.
Question 194
A CFA candidate uses CFA marks in an unauthorized blog. This is:
A. Misrepresentation
B. CFA Program Integrity
C. Duties to Employer
D. Professionalism
Answer: A
Explanation: CFA marks must be used appropriately.
Question 195
A CFA charterholder alters financial results to secure bonuses. This violates:
A. Misrepresentation
B. Duties to Employer
C. Professionalism
D. Fair Dealing
Answer: A
Explanation: Altering results is misrepresentation.
Question 196
A CFA member withholds negative credit ratings to maintain relationships. This violates:
A. Independence and Objectivity
B. Professionalism
C. Duties to Clients
D. Misrepresentation
Answer: A
Explanation: Ratings must be issued independently.
Question 197
A CFA candidate downloads leaked exam materials. This violates:
A. CFA Program Integrity
B. Professionalism
C. Misrepresentation
D. Duties to Employer
Answer: A
Explanation: Using leaked content breaches CFA exam rules.
Question 198
A CFA charterholder promotes returns using misleading timeframes. This violates:
A. Misrepresentation
B. Fair Dealing
C. Professionalism
D. Duties to Clients
Answer: A
Explanation: Cherry-picking timeframes is misrepresentation.
Question 199
An analyst issues optimistic projections without evidence to please management. This violates:
A. Diligence and Reasonable Basis
B. Independence and Objectivity
C. Misrepresentation
D. Fair Dealing
Answer: A
Explanation: Research must have a reasonable basis.
Question 200
A CFA charterholder conceals personal bankruptcy when soliciting new clients. This violates:
A. Professionalism
B. Misrepresentation
C. Duties to Employer
D. Fair Dealing
Answer: A
Explanation: Personal financial distress that affects integrity must be disclosed.
Conclusion
Ethics is a cornerstone of the CFA exam and can be the deciding factor in whether you pass or fail Level 2. By practicing with 200 MCQs and 30 Item Sets, you’ll gain the exam-style exposure and ethical reasoning needed to succeed.
Stay consistent, practice smart, and your CFA charter journey will be one step closer! 🚀