CIC Ethics & Professional Standards 3

Question 1

A CIC manages both individual and institutional accounts. When a large block trade is executed, how should the shares be allocated?

Accepted Answer

Shares should be allocated fairly and consistently using a pre-established policy

Answer

A fair and consistent pre-established allocation policy ensures equitable treatment of all clients regardless of account size or profitability.

Question 2

Which scenario best represents a violation of the standard of care under CIC ethics?

Accepted Answer

Placing an aggressive growth fund in an 80-year-old's sole income account without analysis

Answer

Recommending high-risk investments unsuitable for a client's age and income needs without analysis violates the suitability and standard of care requirements.

Question 3

A CIC discovers that a colleague has been front-running client orders for personal profit. The CIC's ethical obligation is to:

Accepted Answer

Report the misconduct to compliance or appropriate supervisory authority

Answer

Ethical standards require immediate reporting of known misconduct to compliance or a supervisory authority to protect client interests.

Question 4

Under CIC professional standards, performance presentations must be:

Accepted Answer

Fair, accurate, and not selectively omit periods of poor performance

Answer

Performance presentations must be fair and complete, including all relevant time periods, to prevent misleading prospective clients.

Question 5

A client instructs a CIC to vote their proxies in a way that benefits a political cause rather than maximizing share value. The CIC should:

Accepted Answer

Follow the client's instructions since the client owns the shares

Answer

Proxy voting authority belongs to the client, and the CIC must follow explicit client instructions on how to vote their securities.

(CIC) Certified Investment Counselor Practice Test

(CIC) Certified Investment Counselor Practice Test

CIC Ethics & Professional Standards 3