AIFA Ethics & Professional Standards Flashcards
6 cards from real AIFA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 AIFA Ethics & Professional Standards flashcards as text
Under the CFA Institute Code of Ethics, which duty takes precedence when an investment professional's personal interests conflict with those of a client?
Answer: Client interests always come first
The CFA Code of Ethics requires that client interests always take precedence over an investment professional's personal or employer interests.
An AIFA candidate learns material nonpublic information about a company from a corporate insider. What is the correct course of action?
Answer: Refrain from trading and consult compliance
Using material nonpublic information violates insider trading laws; the candidate must refrain from trading and report the situation to the compliance department.
Which of the following best describes the duty of loyalty under professional ethics standards for investment professionals?
Answer: Placing client interests above personal and employer interests
Loyalty requires prioritizing client interests above both personal gain and employer directives, ensuring advice and actions serve the client's best interests.
A portfolio manager discovers that a colleague has been front-running client orders. What is the ethical obligation of the manager?
Answer: Report the misconduct to supervisors or compliance
Front-running is a serious ethical violation, and investment professionals have a duty to report known misconduct to appropriate supervisors or compliance personnel.
What does 'suitability' require of a US investment adviser when making recommendations?
Answer: Ensuring the recommendation aligns with the client's financial situation, objectives, and risk tolerance
Suitability requires that any recommendation be appropriate for the client's specific financial situation, investment objectives, time horizon, and risk tolerance.
Which standard requires investment professionals to make 'reasonable and diligent efforts' to obtain client financial information before providing advice?
Answer: Know Your Customer (KYC)
Know Your Customer (KYC) requirements obligate advisers to gather sufficient client information before making any investment recommendation.