Question #39
Reading: Reading 42.5 Standards of Professional Conduct Guidance for Standards V
PDF File: Reading 42.5 Standards of Professional Conduct Guidance for Standards V.pdf
Page: 20
Status: Incorrect
Correct Answer: A
Your Answer: C
Question
An analyst receives a report from his research department that summarizes and interprets a recent speech from the chairman of the U.S. Federal Reserve. The summary says that the chairman thinks inflation is under control. Based upon this summary, the analyst says in his next newsletter that inflation is under control. This is a violation of:
Answer Choices:
A. none of the Standards listed here
B. Standard V(A), Diligence and Reasonable Basis, only
C. Standard V(A), Diligence and Reasonable Basis, and Standard V(B), Communication with Clients and Prospective Clients
Explanation
The analyst should verify that the research department has interpreted the chairman's
speech correctly. The analyst must make it clear that the statement concerning inflation is
only an opinion. No one knows if that is true or not at any point in time. Based upon the
given information, we cannot say that the analyst is violating only one standard. The
analyst may also be violating plagiarism in accordance with Standard I(C),
Misrepresentation. Hence, the answer citing the two standards and not limiting violations
to just those two standards is the best answer.
(Module 42.8, LOS 42: V(A))