Question #45
Reading: Reading 42.1 Standards of Professional Conduct Guidance for Standards I
PDF File: Reading 42.1 Standards of Professional Conduct Guidance for Standards I.pdf
Page: 18
Status: Incorrect
Correct Answer: A
Your Answer: A
Question
Milton Baker, CFA, prepares a research report on the dynamics of a stock price. In his study, he uses a considerable number of information sources, both outside sources and his company's own research papers, prepared for both internal and public use. The report will first be distributed at the monthly department meeting and then later will be published on the company's Internet site. He thinks that he may have neglected to mention some of his sources in his reference list but decides that he needs to be concerned about full disclosure of his sources only for the public version of the report, so he will wait to revise his work until after the monthly meeting but before it is published on the internet site. Which Standards does Baker NOT comply with?
Answer Choices:
A. Standard I(C), Misrepresentation, only
B. Standard I(C), Misrepresentation, I(B), Independence and Objectivity, and I(A), Knowledge of the Law
C. Standard I(C), Misrepresentation, and I(A), Knowledge of the Law
Explanation
Baker has some doubts but does not initiate any action presuming they only apply to the
publicly disclosed report. The lack of action is a violation of Standard I(A), Knowledge of
the Law. He also violates Standard I(C), Misrepresentation, by failing to properly disclose
the sources of his information, where necessary.