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CFA Level 1 Exam

3959 Questions

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Question No. 1

Shortin Mart is a quantitative research analyst with Dataminers, an investment advisory firm which prides itself on finding patterns in past market data. Shortin recently used data on high-yield, distressed firm corporate convertible bonds and discovered that over the last 3 years, this class has generated an astounding 76% rate of return (assuming optimal conversion). Realizing that this result is mainly due to a strong bull market, he recommends to his portfolio managers that if they believe the market will be bullish over the next year, they should add extreme junk bonds to their portfolios. Shortin has

I. not violated any code of ethics.
II. has violated Standard IV (A.1) - Reasonable Basis & Representations.
III. has violated Standard IV (A.2) - Research Reports.
IV. has violated Standard IV (B.2) - Portfolio Investment Recommendations and Actions.
Choose the correct option from the given list.
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