Standard IV (B.8) deals with ________.
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A. B. C. D. E. F. G.E
Standard IV (B.8) states that members shall disclose to all clients any referral fees received by the member for the recommendation of any services to the client or prospect.
Standard IV (B.8) of the CFA® Level 1 curriculum deals with the "Prohibition against Use of Material Nonpublic Information." This standard is an important ethical principle that applies to all CFA® charterholders and candidates.
A. Prohibition against Use of Material Nonpublic Information: This answer choice accurately describes the content of Standard IV (B.8). It emphasizes the obligation of CFA® charterholders and candidates to not use material nonpublic information in their investment decision-making process. Material nonpublic information refers to any information that has not been disclosed to the public and could significantly impact the value of a security if it were known.
The purpose of this standard is to promote fairness and integrity in the financial markets. By prohibiting the use of material nonpublic information, CFA® charterholders and candidates are expected to make investment decisions based on publicly available information and to avoid taking advantage of information that is not accessible to the general public.
It's important to note that this prohibition applies not only to the direct use of material nonpublic information but also to the indirect use, such as passing the information to others or trading based on such information.
B. Preservation of Confidentiality: Although the preservation of confidentiality is an important ethical principle, it is not specifically addressed in Standard IV (B.8). Therefore, this answer choice is not correct in relation to the specific standard being asked about.
C. None of these answers: This answer choice is incorrect since there is a specific standard that deals with the prohibition against the use of material nonpublic information.
D. Prohibition against Misrepresentation: While the prohibition against misrepresentation is an important ethical principle, it is not specifically addressed in Standard IV (B.8). Therefore, this answer choice is not correct in relation to the specific standard being asked about.
E. Disclosure of Referral Fees: The disclosure of referral fees is not the primary focus of Standard IV (B.8). This standard primarily deals with the prohibition against the use of material nonpublic information. Although fee disclosures are covered in other standards, they are not the main subject of this particular standard.
F. Disclosure of Conflicts to Clients and Prospects: While the disclosure of conflicts to clients and prospects is an important ethical principle, it is not specifically addressed in Standard IV (B.8). Therefore, this answer choice is not correct in relation to the specific standard being asked about.
G. Priority of Transactions: The priority of transactions, which refers to the fair allocation of investment opportunities among clients, is an important ethical principle. However, it is not specifically addressed in Standard IV (B.8). Therefore, this answer choice is not correct in relation to the specific standard being asked about.
In summary, the correct answer is A. Standard IV (B.8) of the CFA® Level 1 curriculum deals with the prohibition against the use of material nonpublic information.