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Crack the CFA Exam: Webinar on Ethics and Corporate Finance

November 22, 2013
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This blog is an extension of our blog on CFA Webinar on FSA: Questions and Answers.

Round two of the CFA Webinar Question Answer sessions! This will aid your CFA prep in more ways than one. Find below a recording of the discussion on CFA Ethics and Corporate Finance.

The answers to the questions are given right here as well.

Find here a brief summary of some of the most important points of CFA Ethics and Corporate Finance:

#CFA Webinar

Question 1:

In country risk premium, can we be asked to calculate the standard deviation equity index or sovereign bond?

Answer 1:

No, there is very little chance that they will ask you to calculate this.

Question 2:

What is the correct treatment of floatation costs?

Answer 2:

Always include in CF0 for correct treatment of flotation cost.

Question 3:

How many questions can be expected on GIPS?

Answer 3:

You cannot tell for sure. But you can expect 3-4.

Question 4:

When you notice a violation, do you ask the person to stop doing it or inform your superior or go to the compliance department?

Answer 4:

If you have noticed a violation, you need to first disassociate yourself from this and then you need to inform your supervisor or go to the compliance department.

Question 5:

Is misconduct is specific to conduct at work?

Answer 5:

It is not necessary that it is specific only to conduct at work.

Question 6:

Can non-public information be used for clients?

Answer 6:

If you have non-material, non-public information, then you can use it for clients or for other reasons. But if you have material non public information then you cannot use it for client recommendations or analysis.

Question 7:

What if you go for a company visit? The information you get from it may be material, but non public. Can't you use the information in that case?

Answer 7:

No, you are not supposed to use this information for investment decisions.

Question 8:

There is a figure for optimal capital budget. What does it mean?

Answer 8:

It means that the budgeting has a set of projects that maximizes a company’s wealth.

Question 9:

Could you please explain the standard on Independence & objectivity at the end of the session today? The confusion around when we ought to accept gifts/sponsored trips/accommodation, etc.

Answer 9:

If the gifts are modest you can accept it or otherwise you need to take written permission from everybody involved.

Question 10:

Are portfolio managers allowed to participate in oversubscribed IPOs?

Answer 10:

No. It is unethical to participate in oversubscribed IPO.

To read more, just follow the link to CFA Webinar on Economics.

If you have any queries, comments or questions feel free to post them in the comments section or visit our forum.

There will be subsequent blogs on more questions and discussions that will take place on the following days. So stay tuned for more!


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