CFA Level 1 Exam
Question No. 1
Tomonaga Olawando is a research analyst currently doing research on Cleebok Shoes, a footwear
manufacturer infamous for its exorbitantly priced shoes. Tomonoga has been interviewing Pollyanna Givens, a
senior vice president with the public relations division. Pollyanna has told him that the investment community
has underestimated the payoffs from Cleebok's plan to outsource shoe production to Mexico, thus cutting
productions costs significantly. She told him her estimate puts thecost savings close to $600 million, as against
the figure of $370 million quoted by a few active analysts. In his report, Tomonaga states that the extra savings
of $230 million a year will raise the stock price by 26% over the next year and hence, represents a great buy. Tomonaga 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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