Section 1.
Ethics
[CMT Level III_Ethics_Q23]
Ren Griswold, CMT, manages a portfolio of managed futures accounts for several institutional clients. He invests in various spread
strategies involving a number of commodities. Ren has a hunch that gold prices are about to soar higher. In the past his hunches
have been highly profitable investments, so he asks his technical analyst to draft up a bullish outlook for gold that he can use
to help persuade his clients to allocate more money toward gold than his mandate normally allows.
Which of the following statements about Ren is the most accurate? (2 points)
A. Ren should act with prudence and care by doing the analysis himself so that it is not likely to be in violation of Standard
III(A).
B. Ren should do the analysis himself because the data is likely to be misrepresented otherwise.
ard
I(B).
ard
II(D).
Choice C is correct. From the CFA Code of Ethics and Standards of Professional Conduct,
Section I.B, Independence and Objectivity: and
maintain independence and objectivity in their professional activities. Members and Candidates must not offer, solicit, or accept
any gift, benefit, compensation, or consideration that reasonably could be expected to compromise
[CMT Level III_Ethics_Q24]
James Bunson, CMT is a proprietary trader who has been trading a system he has developed and refined over the past five
years. His firm intends to soon use the system in an automated fashion as part of their CTA business. James finds one day that
his performance data has inadvertently been overstated for the past year by about a third. Because the firm is only two weeks
away from launching their offering, James decides to say nothing.
Which of the following statements is most likely to be accurate? (2 points)
A. James is not yet in violation of any standards.
be
off the mark just a little.
C. James is in violation of Standard III(D) by not ensuring that the data is accurate.
D. James is in violation of Standard IV(A) by being disloyal to his employer.
Choice C is correct. From the CFA Code of Ethics and Standards of Professional Conduct,
Section III.D, Performance Presentation: and Candidates
must make reasonable efforts to ensure that it is fair,
CMT( ) Level III Exam 12 / 16
Section 1. Ethics
[CMT Level III_Ethics_Q25]
Victor Valezia, CMT is a technical analyst who publishes technical opinions for an investment bank. His good friend Jarom
works as a midlevel production manager for WEI Industries, a large manufacturing company. At lunch Jarom explained to Victor
than his company had to fill a very large order for their customer, Super Motors Inc. (SPMI). Jarom felt certain that his company
would be late with their shipments and expressed his opinion that this would in turn hurt SPMI sales and revenues in the
upcoming quarter. Victor returned to his office and checked the chart of SPMI to see if it showed any technical weakness. He
found that there were a number of major weaknesses and he published a recommendation based solely on technical factors
that SPMI was a near-term sell.
Based on this information, which of the following statements is most accurate? (2 points)
A. Victor committed no violation.
B. Victor violated Ethics Standard 1 regarding professional competence, integrity, and judgment.
C. Victor violated Ethics Standard 2, making technical recommendations which were inaccurate or misleading.
D. Victor violated Ethics Standard 5 regarding acting on inside information.
Choice D is correct. From the CFA Code of Ethics and Standards of Professional Conduct,
Section V.A, Diligence and Reasonable Basis: 1. Exercise diligence, independence, and thoroughness in analyzing investments,
making investment recommendations, and taking investment actions. 2. Have a reasonable and adequate basis, supported by
appropriate research and investigation, for any investment analysis, recommendation, or action.
[CMT Level III_Ethics_Q26]
Chris Cox, CMT, was a portfolio manager for a large hedge fund and left to start her own fund. One of her first actions was to
announce to everyone on Linkedln that she had made the change. Many of her connections on these systems were made
through associations with her former employer and those people are still clients.
Based on this information, which of the following statements is most accurate? (2 points)
A. Chris committed no violation.
B. Chris has violated Ethics Standard 1 by behaving unprofessionally.
C. Chris has violated Ethics Standard 6 by contacting clients from her previous employer.
D. Chris has violated Ethics Standard 7 by not keeping client matters private.
Choice A is correct.
CMT( ) Level III Exam 13 / 16
