Title 11.1 Ethics And Trust in the Investment Profession answers.pdf ✅

1. When comparing ethical standards with legal standards, which of the following statements is most appropriate?  A. Behavior that complies with ethical standards may not always be legal. B. A code of ethics provides specific rules that exceed legal requirements. C. Regulations codify ethical standards, so a separate code of ethics is not needed. Explanation CFA Institute's curriculum repeatedly emphasizes that legal standards alone are insufficient to shape appropriate behavior among investment professionals. The reasons why include the following: Laws are often too narrow to adequately prohibit all improper behavior. Laws that curb improper behavior are often enacted long after the behavior is first observed; therefore, significant harm caused by the behavior can occur in the interim. Ethics are created to govern moral conduct, which holds members and candidates to a higher standard than required by laws and regulations. The curriculum acknowledges that acting ethically may require members and candidates to perform illegal actions. For example, reporting dishonest conduct (ie, "whistleblowing") may be illegal, but it is ethically appropriate. (Choice B) A code of ethics serves as a general guide for appropriate conduct. Specific rules are established by a standard of conduct, and the standard often clarifies a code of ethics. (Choice C) Although laws may codify ethical standards, not all legal conduct is ethical. For example, it may be legal to use material nonpublic information as a basis for investing, but it is not ethical conduct. Things to remember: Legal standards alone are insufficient to shape appropriate behavior among investment professionals. A separate code of ethics can serve as a guide to appropriate moral conduct, which may exceed legal requirements. The CFA curriculum acknowledges that behaving ethically may sometimes violate applicable legal standards. Compare and contrast ethical standards with legal standards LOS Copyright © UWorld. Copyright CFA Institute. All rights reserved.

3. Which of the following is most likely an appropriate goal of using an ethical decision-making framework? A. Allow for potential unintended consequences  B. Justify the decision to a broad range of stakeholders C. Minimize the perspectives included in the decision-making process Explanation A decision-making framework broadens the decision maker's approach by helping identify all relevant facts, stakeholders, possible conflicts of interest, duties owed, and ethical principles involved in a decision. Once stakeholders have been identified, the framework encourages a decision maker to consider and include the stakeholders' multiple perspectives and concerns. Since a range of stakeholder concerns is included in the decision-making process, the decision maker can better justify the decision to stakeholders. (Choice A) A decision maker should try to minimize the potential for unintended consequences in order to avoid the possibility that one decision, in turn, will create new problems. (Choice C) Including multiple perspectives in the framework helps the decision maker consider factors that might otherwise be overlooked. Things to remember: A decision-making framework is most helpful when it broadens the decision maker's approach by helping identify all relevant facts, stakeholders, possible conflicts of interest, duties owed, and ethical principles involved in a decision. Since a range of stakeholder concerns is included in this process, the decision maker can better justify the decision to stakeholders. describe a framework for ethical decision making LOS Copyright © UWorld. Copyright CFA Institute. All rights reserved.