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?
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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.
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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?
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Knowingly making false or misleading statements about investment qualifications, experience, or performance.- Define "Material nonpublic information."
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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?
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Members must deal fairly with all clients and prospects when providing advisory services or managing assets.- Define the Prudent Investor Rule.
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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?
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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?
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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?
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To ensure compensation structures do not create conflicts of interest or incentivize unethical behavior.- Define "demand" in economics.
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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?
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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.
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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?
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A good for which demand increases when consumer income rises.- Define "perfect competition."
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A market with many buyers and sellers of identical products, free entry and exit, and perfect information.- What is a monopoly?
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A market with a single seller of a unique product with no close substitutes and barriers to entry.
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