Question #16
Reading: Reading 42.2 Standards of Professional Conduct Guidance for Standards II
PDF File: Reading 42.2 Standards of Professional Conduct Guidance for Standards II.pdf
Page: 10
Status: Incorrect
Correct Answer: A
Your Answer: C
Question
The mosaic theory is the idea that an analyst can:
Answer Choices:
A. base his recommendations on nonpublic material information only for the clients of the company, but not for the general public
B. make recommendations or trade based on several pieces of public or nonpublic information, each piece by itself being nonmaterial, but when compiled the information becomes material
C. make investment recommendations on the basis of several pieces of nonpublic information as long as the aggregate information remains nonmaterial
Explanation
The mosaic theory permits an analyst to make recommendations based upon several
pieces of public or nonmaterial information, even though the complied result is both
material and nonpublic.
(Module 42.3, LOS 42: II(A))