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CIPMPRINCIPLES EXAM FLASH CARDSPRESENTED BY THE SPAULDING GROUP

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Problem #I-1(1): Ethics

Name the two factors that characterizeinvestment analysis as a profession

(from other types of work).

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Solution for # I-1(1): Ethics

Source: Ethics in Practice (pp. 2-3)

1. An established Body of Knowledge

2. A commitment to a broader good than the practitioner’s self-interest

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Problem #I-1(2): Ethics

Which of the following statementsregarding the Body of Knowledge is false?

1. There is general agreement within the industry on its scope and content.

2. The Body of Knowledge is well-established and remains constant over time.

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Solution for # I-1(2): Ethics

Source: Ethics in Practice (p. 3)

Statement #2 is false. The Body of Knowledgegrows and evolves over time as new

insights are published.

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Problem #I-2(1): Ethics

True or False:

The CIPM Code and Standards binds coveredpersons to comply with all laws.

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Solution for # I-2(1): Ethics

Source: Ethics in Practice (p. 5)

False: Covered persons are notrequired to comply with unjust laws.

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Problem #I-2(2): Ethics

True or False:

The CIPM Code and Standards do not requirecovered persons to have the same level of

knowledge of laws and regulations as attorneys,but they must at least have the

same level of expertiseas compliance officers.

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Solution for # I-2(2): Ethics

Source: Ethics in Practice (p. 4)

False: Covered persons are need not have thelegal expertise of attorneys or compliance

officers, but must have knowledge sufficient tocover their daily work, and know when they need

authoritative guidance.

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Problem #I-3(1): Ethics

True or False:

The CIPM Code of Ethics forbids coveredpersons from engaging in activities that damage

the investment profession.

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Solution for # I-3(1): Ethics

Source: Ethics in Practice (p. 9)

True.

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Problem #I-3(2): Ethics

True or False:

The CIPM Code of Ethics binds covered personsto comply with all laws.

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Solution for # I-3(2): Ethics

Source: Ethics in Practice (p. 9)

False. Covered persons are not ethically bound to comply with unjust laws.

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Problem #I-4(1): Ethics

What is the test of materiality for non-publicinformation that covered persons must not act

(trade) on or cause others to act on?

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Solution for # I-4(1): Ethics

Source: Ethics in Practice (p. 16)

Non-public information is considered material if

a) It could affect the price of a security.b) It reflects advance market knowledge or

security specific information that a reasonableinvestor would consider when making investment decisions.

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Problem #I-4(2): Ethics

Under what circumstances may covered personsrelease confidential information about their

current, past and prospective clients?

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Solution for # I-4(2): Ethics

Source: Ethics in Practice (pg 23)

1. When illegal activity has occurred2. When disclosure is allowed by client3. When required by law