Question #38
Reading: Reading 42.4 Standards of Professional Conduct Guidance for Standards IV
PDF File: Reading 42.4 Standards of Professional Conduct Guidance for Standards IV.pdf
Page: 16
Status: Incorrect
Correct Answer: B
Your Answer: A
Question
Bill Valley has been working for Advisors, Inc., for several years, and he just joined CFA Institute. Valley's sister just received a large bonus in the form of stock options in Zephyr, Inc. Valley's sister knows nothing about financial assets and offers Valley a week at her holiday home each year in exchange for Valley monitoring Zephyr and the value of her stock options. In order to comply with the Code and Standards, Valley needs to inform Advisors of:
Answer Choices:
A. nothing since no money is involved and it is a favor for a family member
B. the compensation in the form of the use of the holiday home only
C. both the use of the holiday home and his sister's options
Explanation
According to Standard IV(A), Loyalty to Employer, Valley must inform Advisors of his
outside consultation even if it is not for monetary compensation. According to Standard
VI(A), Disclosure of Conflicts, Valley must also disclose possible conflicts of interest, and
his sister's position qualifies.
(Module 42.7, LOS 42: IV(A))