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Basic Question 4 of 5
Jake Smith, an analyst with a large brokerage house, analyses a company called DDM. He gives the company as a "buy" recommendation. He recently hears in the market that the company is going to experience difficult times ahead. He immediately changes his recommendation to "sell." Has Jake violated the Code and Standards?
B. Yes, because he should have changed his rating to a "hold" recommendation.
C. Yes, because market information is not always reliable.
A. Yes, because he did not have a reasonable and adequate basis for his recommendation.
B. Yes, because he should have changed his rating to a "hold" recommendation.
C. Yes, because market information is not always reliable.
User Contributed Comments 4
| User | Comment |
|---|---|
| Khadria | "market information is not always reliable" might look correct but its NOT because the reason stated is not the ground why he has violated the standards. Reason in "A" is proper ground for violation. |
| dblueroom | basically for someone to simply switch from buy to sell without any substantial basis is a violation. |
| johntan1979 | Just for fun :) theinvestmentinsight.files.wordpress.com/2012/05/book-buy-sell-sell-sm.jpg |
| raffrobb | Diligence means unpacking and investigating for oneself. |
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Learning Outcome Statements
demonstrate the application of the Code of Ethics and Standards of Professional Conduct to situations involving issues of professional integrity
recommend practices and procedures designed to prevent violations of the Code of Ethics and Standards of Professional Conduct
identify conduct that conforms to the Code and Standards and conduct that violates the Code and Standards
CFA® 2024 Level I Curriculum, Volume 6, Module 3.