Ethics and Professional Responsibility Flashcards
7 cards from real CIMA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Ethics and Professional Responsibility flashcards as text
A CIMA professional serves on the board of a public company while also managing client portfolios that include that company's stock. This situation requires:
Answer: Full disclosure of the board role to clients and the firm, and implementation of information barriers
Board membership creates a significant conflict of interest that must be disclosed and managed through information barriers, not necessarily through resignation.
Under CIMA ethical standards, which description best defines a 'fiduciary' relationship?
Answer: A relationship in which one party is obligated to act solely in the best interest of another
A fiduciary relationship legally and ethically obligates one party to act in the exclusive interest of the beneficiary, placing the beneficiary's interests above their own.
Which of the following would be considered a misleading communication to clients under CIMA's ethics standards?
Answer: Using backtested model performance labeled as actual historical results
Presenting backtested hypothetical performance as actual historical results is materially misleading because it overstates the reliability of the track record.
A CIMA professional manages a discretionary account and receives a client directive to make a trade the professional believes is unsuitable. The most appropriate response is to:
Answer: Discuss the suitability concerns with the client, document the conversation, and follow the client's final decision if they insist
The professional should communicate suitability concerns clearly, document them, but ultimately respect a competent client's right to direct their own account.
Which of the following best illustrates the ethical concept of 'due diligence' in the context of manager selection?
Answer: Conducting thorough qualitative and quantitative analysis of investment process, risk controls, and firm stability before recommending a manager
Due diligence in manager selection requires a comprehensive review of investment process, personnel, risk management, and operational controls, not reliance on returns alone.
In the context of CIMA ethics, which of the following is most likely to constitute market manipulation?
Answer: Placing a series of trades to create a false appearance of active trading in a thinly traded security
Creating artificial trading activity to mislead other market participants about supply, demand, or price is market manipulation, regardless of whether profits are made.
A CIMA professional accepts a position at a competing firm. Regarding client information obtained from their previous employer, the professional must:
Answer: Refrain from using any confidential client information obtained at the previous firm
Confidential client information obtained during employment belongs to the previous employer and cannot be used at a competing firm after departure.