Ethics!

Good question, @macroeconomist. I think it depends on the situation; for simple enough fixed income securities, a full valuation may be overkill (and it’s going to cost $$$ to complete) when the 1st- & 2nd-order approximations (duration & convexity) will cut it at 95-99% accuracy. Then again, in real life it’s likely that in most situations you’ll have complex instruments that won’t jive unless the full valuation approach is used.

On ethics, I believe the breach of the fiduciary duty comes about when the analyst, knowingly or not, decides to use too rough an approximation that ends up being inaccurate and risk leaving $$$ on the table for the client.

Hope this makes some sense!

Read Ethics thoroughly from the CFAI Curriculum.

Underline all the important points or better rephrase the important takeaways of each standard in your own words.

Read all examples carefully and try to come up with an answer before going through their solutions. This will greatly build your understanding of the material!

Solve only half of the EOCs at first, and leave the remaining half for your second read.

Practice by solving as much questions of ethics as possible. Schweser practice exams, Elan mocks, CFAI past mocks all are great!

Avoid doing Qbank and watching videos of Schweser for ethics. They are just a waste of time!

Practice by solving as much questions of ethics as possible. Schweser practice exams, Elan mocks, CFAI past mocks all are great!

To me this is the most important point. You will learn the most by doing as many questions as possible and reading the explanations given within the answers.

First, understand the “reasonable man standard,” then “fiduciary duty.” Now ask yourself what a “prudent and reasonable person” would do under the same or similar circumstances as the question…hmm, maybe a few questions on top of that 🙂

Speaking of Ethics, I have a question:

where the client fiduciary is valuing a bond/bond portfolio for the client, isn’t anything short of the full valuation method a breach of fiduciary duty?

Aren’t duration/convexity measures just cursory valuation measures?

Agree with @spyali and @mattyj – good quality practice is key!

@rooftop snipers You can familiarize yourself with the fundamental ethical principles such as honesty, fairness, respect, and responsibility. Understanding these principles provides a foundation for ethical decision-making.