Truth vs Loyalty: Investment Ethics Quiz and Flashcards

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Questions and Answers

What is the main expectation regarding the conduct of a Regulated Person according to CIRO?

To engage in business conduct detrimental to the public interest

To observe high standards of ethics and conduct in business transactions (correct)

To disregard legal and regulatory obligations

To prioritize personal gains over ethical standards

According to CIRO, what type of business conduct would be considered detrimental to the public interest?

Conduct reflecting high ethical standards

Conduct likely to increase investor confidence

Negligent conduct (correct)

Conduct in compliance with legal obligations

What does CIRO expect regarding the behavior of a Regulated Person in conducting business?

Engage in conduct likely to increase investor confidence

Ignore the policies of a Regulated Person

Manipulate business transactions for personal gain

Act openly, fairly, and in accordance with just and equitable principles of trade (correct)

In what situation would any business conduct contravene the standards set forth by CIRO?

If it displays an unreasonable departure from expected standards Signup and view all the answers

What does CIRO expect from the representative regarding compliance with legal, regulatory, and contractual obligations?

Failure to comply with OSC regulations Signup and view all the answers

What is the duty of care that Registered Representatives (RRs) must follow to ensure suitability of investment recommendations for clients?

Honesty and good faith Signup and view all the answers

According to CIRO, what values guide individual behaviors in the context of ethics?

Honesty, fairness Signup and view all the answers

Under which rule section are the standards of care for Discretionary Accounts and Managed Accounts set out?

Rule section 3270: Discretionary Accounts and Managed Accounts Signup and view all the answers

What is the main difference between a Registered Representative (RR) and an Investment Representative (IR)?

RR can provide investment advice and take both solicited and unsolicited orders, while IR can only take unsolicited orders and cannot provide investment advice Signup and view all the answers

Which of the following best describes ethical relativists' belief about moral principles?

They do not believe in universal moral principles and place personal needs over the community needs Signup and view all the answers

What is the role of ethical managers in an organization, according to the text?

To prioritize ethical actions over profit Signup and view all the answers

When making an ethical decision, what constitutes an ethical dilemma?

If there are two or more right choices Signup and view all the answers

In ethical dilemmas involving right versus wrong issues, what makes the decision-making process less of a dilemma?

Both actions are right Signup and view all the answers

In ethical dilemmas involving truth versus loyalty, what conflict arises?

Honesty vs commitment to your employer Signup and view all the answers

What type of ethical dilemma involves the conflict between recommending different equity mutual funds based on their performance?

Truth versus loyalty dilemma Signup and view all the answers

As an investor, what type of ethical dilemma might you face when deciding whether to invest for short term or long term?

Short term versus long term dilemma Signup and view all the answers

What does CIRO expect from its Regulated Persons?

To act with high standards of ethics and conduct Signup and view all the answers

Which of the following situations may contravene the standards set forth by CIRO?

Business conduct that diminishes investor confidence in the markets Signup and view all the answers

What type of ethical dilemma might a Registered Representative (RR) face when making investment recommendations?

Deciding between disclosing or concealing crucial information from clients Signup and view all the answers

What is the main expectation regarding the conduct of a Regulated Person according to CIRO?

To observe high standards of ethics and conduct Signup and view all the answers

What action could subject a Registered Representative (RR) to disciplinary action by CIRO?

Failing to update the new account application form (NAAF) after material client changes Signup and view all the answers

What organization has regulatory power in the Canadian Securities industry?

Provincial securities commissions Signup and view all the answers

What type of license must a Portfolio Manager have to place orders to buy or sell securities without client approval?

Registered Representative license Signup and view all the answers

What is the consequence if a RR does not follow the procedures for achieving KYC (Know Your Client)?

The RR could be subject to disciplinary action by CIRO Signup and view all the answers

In ethical decision-making, the 'front page test' is used to assess the decision against what criteria?

Reputation and public perception Signup and view all the answers

In ethical dilemmas involving 'truth versus loyalty', what type of conflict arises?

End-based ethical thinking versus rule-based ethical thinking Signup and view all the answers

What is the focus of 'end-based ethical thinking' in ethical decision-making?

Maximizing benefits to the maximum people Signup and view all the answers

In ethical dilemmas involving right versus right issues, what makes the decision-making process a dilemma?

Both choices are right, but you have to choose one Signup and view all the answers

What type of ethical dilemma involves the conflict between recommending different equity mutual funds based on their performance?

Truth versus loyalty dilemma Signup and view all the answers

When facing an ethical dilemma related to short term versus long term investment, what is the main consideration for an investor?

Long term financial goals versus short term gains Signup and view all the answers

In ethical dilemmas involving truth versus loyalty, what conflict arises?

The conflict between honesty and commitment to employer Signup and view all the answers

Study Notes

Conduct and Ethics

A Regulated Person is expected to conduct business in a manner that does not contravene the standards set forth by CIRO, avoiding business conduct detrimental to the public interest.
CIRO expects Regulated Persons to comply with legal, regulatory, and contractual obligations, and to conduct business in a manner that maintains public trust and confidence.

Standards of Care

Standards of care for Discretionary Accounts and Managed Accounts are set out in Rule 1300.
Registered Representatives (RRs) have a duty of care to ensure suitability of investment recommendations for clients, which includes considering various factors, including the client's investment goals and risk tolerance.

Ethics

CIRO values individual behaviors guided by integrity, fairness, professionalism, and a commitment to excellence.
Ethical relativists believe that moral principles vary from culture to culture and from person to person.
Ethical managers play a critical role in promoting an ethical culture within an organization.

Ethical Dilemmas

An ethical dilemma arises when an individual faces a difficult choice between two or more conflicting options, often involving moral principles or values.
In right versus wrong issues, a clear moral principle guides decision-making, making the decision less of a dilemma.
In truth versus loyalty conflicts, a dilemma arises between being truthful and being loyal to an individual or organization.
Recommending different equity mutual funds based on their performance is an example of a conflict between right versus right, where both options have merit.
An investor may face an ethical dilemma when deciding between short-term and long-term investments, considering factors such as risk tolerance and investment goals.

CIRO and Regulation

CIRO expects Regulated Persons to conduct business in a manner that maintains public trust and confidence.
Failure to follow procedures for achieving Know Your Client (KYC) may result in disciplinary action by CIRO.
A Portfolio Manager must have a license to place orders to buy or sell securities without client approval.
The Canadian Securities industry is regulated by CIRO.

Decision-Making

The 'front page test' assesses a decision against the criteria of whether it could withstand public scrutiny.
End-based ethical thinking focuses on the consequences of a decision.
In right versus right issues, the decision-making process is a dilemma due to the difficulty in choosing between two morally right options.

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Explore the concepts of discretionary power in investment and ethical decision making. Learn about the relationships between values, ethics, and ethical decision making in the investment industry.

Discretionary Power and Ethical Decision Making in Investment

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Questions and Answers

What is the main expectation regarding the conduct of a Regulated Person according to CIRO?

According to CIRO, what type of business conduct would be considered detrimental to the public interest?

What does CIRO expect regarding the behavior of a Regulated Person in conducting business?

In what situation would any business conduct contravene the standards set forth by CIRO?

What does CIRO expect from the representative regarding compliance with legal, regulatory, and contractual obligations?

What is the duty of care that Registered Representatives (RRs) must follow to ensure suitability of investment recommendations for clients?

According to CIRO, what values guide individual behaviors in the context of ethics?

Under which rule section are the standards of care for Discretionary Accounts and Managed Accounts set out?

What is the main difference between a Registered Representative (RR) and an Investment Representative (IR)?

Which of the following best describes ethical relativists' belief about moral principles?

What is the role of ethical managers in an organization, according to the text?

When making an ethical decision, what constitutes an ethical dilemma?

In ethical dilemmas involving right versus wrong issues, what makes the decision-making process less of a dilemma?

In ethical dilemmas involving truth versus loyalty, what conflict arises?

What type of ethical dilemma involves the conflict between recommending different equity mutual funds based on their performance?

As an investor, what type of ethical dilemma might you face when deciding whether to invest for short term or long term?

What does CIRO expect from its Regulated Persons?

Which of the following situations may contravene the standards set forth by CIRO?

What type of ethical dilemma might a Registered Representative (RR) face when making investment recommendations?

What is the main expectation regarding the conduct of a Regulated Person according to CIRO?

What action could subject a Registered Representative (RR) to disciplinary action by CIRO?

What organization has regulatory power in the Canadian Securities industry?

What type of license must a Portfolio Manager have to place orders to buy or sell securities without client approval?

What is the consequence if a RR does not follow the procedures for achieving KYC (Know Your Client)?

In ethical decision-making, the 'front page test' is used to assess the decision against what criteria?

In ethical dilemmas involving 'truth versus loyalty', what type of conflict arises?

What is the focus of 'end-based ethical thinking' in ethical decision-making?

In ethical dilemmas involving right versus right issues, what makes the decision-making process a dilemma?

What type of ethical dilemma involves the conflict between recommending different equity mutual funds based on their performance?

When facing an ethical dilemma related to short term versus long term investment, what is the main consideration for an investor?

In ethical dilemmas involving truth versus loyalty, what conflict arises?

Study Notes

Conduct and Ethics

Standards of Care

Ethics

Ethical Dilemmas

CIRO and Regulation

Decision-Making

Studying That Suits You

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