CFA CFA Level 1 Question of the Week – Ethical and Professional Standards

Question of the Week – Ethical and Professional Standards

  • This topic has 3 replies, 3 voices, and was last updated May-18 by AdaptPrep.
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    • AdaptPrep
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      Allen Young, CFA, owns a 3% shareholder position in Valenti Graphics. Allen purchased a large number of Valenti call options in an attempt to increase the share price. Allen also started a false rumor online that Unitel is considering buying out Valenti Graphics. Allen is most likely in violation of CFA Institute Standard:

      • By spreading the rumor
      • By purchasing the options
      • Both by purchasing the options and by spreading the rumor
    • keerthana
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      which one is the correct answer?
      what does blue bar mean?

    • policedog
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      The correct answer is the one answered by @PassedTense 🙂

    • AdaptPrep
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      The two primary market manipulations are transaction-based
      and information-based. There is nothing illegal about purchasing a large number
      of call options, so there is no violation there. By spreading false
      information, Allen is guilty of information-based
      manipulation.

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