AIFA AIFA Ethics & Professional Standards

Question 1

Under the CFA Institute Code of Ethics, which duty takes precedence when an investment professional's personal interests conflict with those of a client?

Accepted Answer

Client interests always come first

Answer

Personal interests may be balanced with client interests

Answer

Employer interests take precedence over client interests

Answer

Regulatory compliance overrides client duties

Question 2

An AIFA candidate learns material nonpublic information about a company from a corporate insider. What is the correct course of action?

Accepted Answer

Refrain from trading and consult compliance

Answer

Trade immediately to benefit clients

Answer

Disclose the information broadly before trading

Answer

Use the information only for discretionary accounts

Question 3

Which of the following best describes the duty of loyalty under professional ethics standards for investment professionals?

Accepted Answer

Placing client interests above personal and employer interests

Answer

Acting in the employer's best financial interest at all times

Answer

Maximizing portfolio returns regardless of risk tolerance

Answer

Following all instructions from senior management without question

Question 4

A portfolio manager discovers that a colleague has been front-running client orders. What is the ethical obligation of the manager?

Accepted Answer

Report the misconduct to supervisors or compliance

Answer

Ignore it if it does not affect their own clients

Answer

Confront the colleague privately and take no further action

Answer

Wait to see if the behavior continues before reporting

Question 5

What does 'suitability' require of a US investment adviser when making recommendations?

Accepted Answer

Ensuring the recommendation aligns with the client's financial situation, objectives, and risk tolerance

Answer

Recommending the highest-returning product available

Answer

Offering only SEC-registered products

Answer

Providing the lowest-cost option in every product category

Question 6

Which standard requires investment professionals to make 'reasonable and diligent efforts' to obtain client financial information before providing advice?

Accepted Answer

Know Your Customer (KYC)

Answer

Standard of Care

Answer

Prudent Investor Rule

Answer

Best Execution Standard