CFA Level 2: Ethic & Professional Standards – Introduction

How seriously do you take the professional standards section of this examination?  Citing a personal example, I firmly believe that scoring 70%+ on this section decided my pass for level three.  Committing to score 70%+ on this topic must be part of your exam strategy.

On the test candidates can expect two item sets total (10% of the test) – one in the morning and one in the afternoon.

Item Set = 1 story + 6 multiple choice questions

The item set’s story (which can be several small stories) will walk you through situations involving firms, government/regulatory bodies, and people - charterholders, candidates, investors, beneficiaries, and so on.

Correct answers will center on your ability to apply: seven professional standards of conduct, the Soft Dollar Standards, and the Research Objectivity Standards.

Tip: the most conservative choice is not always the correct choice and when local laws differ with the standards, the stricter of the two must be followed.

Material (refer to study sessions one and two in your Level II CFA Program Curriculum©):

  1. The Code of Ethics (six components)
  2. The Seven Standards – likely tested in both item sets; possibly covering one and a part of the other.
  3. CFAI Soft Dollar Standards – likely part of one item set; worst case would be nearly all of one item set
  4. CFAI Research Objectivity Standards – same as Soft Dollars.
  5. Prudent Investor Rule
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