Core CFA Level 1 vocabulary across ethics, economics, and financial reporting.
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- What is the primary focus of the CFA Institute Code of Ethics?
- To place the integrity of the investment profession and the interests of clients above personal gain.
- Define the standard "Independence and Objectivity" in CFA Standards of Professional Conduct.
- Members must not offer, solicit, or accept any gift, benefit, or compensation that could impair objectivity or create a conflict of interest.
- What does the standard "Misrepresentation" prohibit?
- Knowingly making false or misleading statements about investment qualifications, experience, or performance.
- Define "Material nonpublic information."
- Information that is not available to the public and could affect the price of a security if disclosed.
- What is the duty of fair dealing in the Standards?
- Members must deal fairly with all clients and prospects when providing advisory services or managing assets.
- Define the Prudent Investor Rule.
- A fiduciary must exercise care, skill, and caution when managing assets for others, acting as a prudent person would.
- What is a conflict of interest in the context of CFA Standards?
- Any situation where a member's personal interests or those of their employer could influence professional judgment.
- What does the Standard of Professional Conduct on Research require?
- Members must have a reasonable basis for investment recommendations and must disclose the basis of analysis.
- What is the purpose of the Standards of Professional Conduct regarding compensation?
- To ensure compensation structures do not create conflicts of interest or incentivize unethical behavior.
- Define "demand" in economics.
- The quantity of a good or service that consumers are willing and able to buy at various prices during a specific period.
- What is the Law of Supply?
- As the price of a good increases, producers are willing to supply a greater quantity, all else held constant.
- Define the price elasticity of demand.
- A measure of how much the quantity demanded of a good changes in response to a change in its price.
- What is a normal good?
- A good for which demand increases when consumer income rises.
- Define "perfect competition."
- A market with many buyers and sellers of identical products, free entry and exit, and perfect information.
- What is a monopoly?
- A market with a single seller of a unique product with no close substitutes and barriers to entry.