Code of Ethics and Standard of Care IA Quiz
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Questions and Answers

What is the first step in the Best Practices for Distribution of Non-arm’s Length Investment products?

  • Product Due Diligence (correct)
  • Suitability assessments
  • Understanding non-arm’s length products
  • Conflict of Interest assessment

    • According to IDPC Rule section 3301, what must a Dealer Member do before making securities available to clients?

  • Assess relevant aspects of the securities, including structure, features, and risks (correct)
  • Approve the securities without assessment
  • Monitor the securities for insignificant changes
  • Assess only the initial costs of the securities

    • What is the duty that requires RRs who provide advice to clients to do so fully, honestly, in good faith, and with the proper skills and knowledge?

  • Ethical duty
  • Fiduciary duty
  • Conflict of Interest duty
  • Duty of care (correct)

    • What does CIRO provide guidance on to dealer members regarding the due diligence on all securities they make available to clients?

    <p>Assessment of relevant aspects of securities</p> Signup and view all the answers

    What factors should a dealer consider when assessing the suitability of an investment for a client?

    <p>The client's current financial situation, investment knowledge, investment objectives, and time horizon</p> Signup and view all the answers

    When should dealer members ensure suitability assessments are performed?

    <p>For each prescribed trigger such as when a trade is accepted or a recommendation is made</p> Signup and view all the answers

    What are some best practices that dealers should follow when performing a new product review?

    <p>Formation of a new product committee to review and approve or disapprove a product</p> Signup and view all the answers

    What should an advisor understand about a product when conducting a new product review?

    <p>How the product is constructed and how it is likely to perform in various market conditions</p> Signup and view all the answers

    In what account should all trading activities be done?

    <p>Pro-Account with the employer</p> Signup and view all the answers

    What is the requirement for continuous education according to the text?

    <p>Annual completion</p> Signup and view all the answers

    What should an IA do with insider information according to the text?

    <p>Not use or tip clients with insider information</p> Signup and view all the answers

    What is the primary duty of Care for Investment Advisors (IA) according to the provided text?

    <p>To prioritize client's interests over their own, such as commission</p> Signup and view all the answers

    What does 'KYC' stand for in the context of the provided text?

    <p>Know Your Client</p> Signup and view all the answers

    According to the code of ethics, what should Investment Advisors (IA) do with unsolicited orders if they are not suitable for the client?

    <p>Reject the order or ask the client to update their financial information</p> Signup and view all the answers

    What is the primary focus of the 'Priority of Client Interests' standard for Investment Advisors (IA)?

    <p>Prioritizing client's interests (suitability) over IA's interests (commission)</p> Signup and view all the answers

    What should dealer members use due diligence to ensure for each of the prescribed triggers?

    <p>Current financial situation</p> Signup and view all the answers

    What should happen before a new product is approved or disapproved by the new product committee?

    <p>Formation of a new product committee</p> Signup and view all the answers

    What should an advisor understand about a product when conducting a new product review?

    <p>How the product is likely to perform in various market conditions</p> Signup and view all the answers

    What should be consistently applied throughout the firm when performing new product reviews?

    <p>Standard of review</p> Signup and view all the answers

    What is the requirement for Investment Advisors (IA) regarding personal trading activities?

    <p>They should conduct all trading activities in a Pro-Account opened with their employer</p> Signup and view all the answers

    What does Standard E of the Securities Acts Compliance entail regarding client information?

    <p>IA should not disclose client information, including portfolio details</p> Signup and view all the answers

    What is the IA's obligation regarding the use of insider information?

    <p>IA should not use or tip clients with insider information</p> Signup and view all the answers

    What does the duty of care require RRs who provide advice to clients to do?

    <p>Provide advice fully, honestly, in good faith, and with the proper skills and knowledge</p> Signup and view all the answers

    Under Step 3 of Best Practices for Distribution of Non-arm’s Length Investment products, what must dealer members do in respect of client orders and recommendations?

    <p>Conduct suitability assessments</p> Signup and view all the answers

    What is the fundamental difference between ethical behavior and compliance with rules according to the text?

    <p>Ethical behavior goes beyond merely complying with rules</p> Signup and view all the answers

    What is the main focus of the CIRO guidance provided to dealer members regarding due diligence on securities available to clients?

    <p>Identifying conflicts of interest</p> Signup and view all the answers

    What is the primary focus of the 'Unsolicited Orders' standard for Investment Advisors (IA)?

    <p>Verifying the client's investment knowledge and experience</p> Signup and view all the answers

    According to the Code of Ethics, what is the primary duty of Care for Investment Advisors (IA)?

    <p>Dealing fairly, honestly, and in good faith with clients</p> Signup and view all the answers

    What should an Investment Advisor (IA) understand about 'Know Your Client' (KYC) procedures?

    <p>The legal and regulatory obligations regarding client information</p> Signup and view all the answers

    In what way should an Investment Advisor (IA) prioritize when it comes to 'Protection of Client Assets'?

    <p>Fulfilling client orders before personal business</p> Signup and view all the answers

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