CFA Level II Vignettes Ethics Standards Client Suitability MCQs Test 2

Practice CFA 2026 Level II Vignettes Ethics Standards MCQs from Client Suitability. Get instant results with Explanation.

Practice Quiz 2 for "Client Suitability" (Ethics Standards). Total 30 MCQs available, split into 3 quizzes. Test your understanding of core concepts. Mastering these concepts is essential for securing a high percentile in CFA.

General10 MCQs

1. Vignette 3: SuitabilityFirst - William Harrison, CFA, recommends a penny stock to a client based on a "hot tip" from a friend, without conducting any fundamental or technical analysis. Has Harrison violated the Standards?

A. Acceptable because the client agreed to the investmentB. Unacceptable because Harrison violated Standard III(C) by not having a reasonable basis for the recommendationC. Acceptable if the client is an accredited investorD. Unacceptable only if the stock declines in value

2. Harrison recommends a high-risk venture capital investment to a client with a net worth of $500,000, of which $400,000 is tied up in a house, and limited cash flow. Which Standard has Harrison violated?

A. Standard III(A) - Loyalty, Prudence, and CareB. Standard III(D) - Performance PresentationC. Standard III(C) - SuitabilityD. Standard V(A) - Diligence and Reasonable Basis

3. Harrison recommends a complex structured product with embedded derivatives to a client who has no understanding of derivatives and has never invested in such products. Which Standard has Harrison violated?

A. Standard III(C) - SuitabilityB. Standard III(A) - Loyalty, Prudence, and CareC. Standard V(A) - Diligence and Reasonable BasisD. Standard VI(A) - Disclosure of Conflicts

4. Harrison recommends a portfolio of 100% investment-grade bonds to a 30-year-old client who seeks long-term capital appreciation and has a high risk tolerance. Which Standard has Harrison violated?

A. Standard III(A) - Loyalty, Prudence, and CareB. Standard III(D) - Performance PresentationC. Standard V(A) - Diligence and Reasonable BasisD. Standard III(C) - Suitability

5. Harrison recommends a speculative commodity fund to a client without assessing the client's ability to withstand a potential 50% loss. Which Standard has Harrison violated?

A. Standard III(A) - Loyalty, Prudence, and CareB. Standard III(C) - SuitabilityC. Standard V(A) - Diligence and Reasonable BasisD. Standard I(C) - Misrepresentation

General10 MCQs

6. Vignette 4: SuitabilityPlus - Elizabeth Sterling, CFA, recommends a private equity fund with a 12-year lock-up to a client who is 75 years old and may need liquidity for healthcare expenses. Has Sterling violated the Standards?

A. Acceptable because private equity has high potential returnsB. Acceptable if the client has other liquid assetsC. Unacceptable because the investment horizon does not match the client's liquidity needsD. Unacceptable only if the investment underperforms

7. Sterling recommends a margin-based investment strategy to a client who has high existing debt and limited cash reserves. Which Standard has Sterling violated?

A. Standard III(C) - SuitabilityB. Standard III(A) - Loyalty, Prudence, and CareC. Standard V(A) - Diligence and Reasonable BasisD. Standard VI(A) - Disclosure of Conflicts

8. Sterling recommends a high-turnover mutual fund that generates significant short-term capital gains to a client in the highest tax bracket. Which Standard has Sterling violated?

A. Standard III(A) - Loyalty, Prudence, and CareB. Standard III(D) - Performance PresentationC. Standard V(A) - Diligence and Reasonable BasisD. Standard III(C) - Suitability

9. Sterling recommends that a client add an additional technology stock to a portfolio that already has 50% exposure to the technology sector. The client's IPS limits sector concentration to 30%. Which Standard has Sterling violated?

A. Standard III(A) - Loyalty, Prudence, and CareB. Standard III(C) - SuitabilityC. Standard V(A) - Diligence and Reasonable BasisD. Standard VI(A) - Disclosure of Conflicts

10. Sterling continues to recommend growth stocks to a client who has just experienced a significant reduction in income and now needs income generation. Sterling has not updated the client's IPS. Which Standard has Sterling violated?

A. Standard III(A) - Loyalty, Prudence, and CareB. Standard III(D) - Performance PresentationC. Standard III(C) - SuitabilityD. Standard V(A) - Diligence and Reasonable Basis

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Conducting Body: CFA Institute

Frequency: 4 times a year (February, May, August, November) | Time: 70 Minutes

Negative Marking: No

⚡ Test Pattern (Total: 90 MCQs):

Subject breakdown not available.

Merit Formula: -

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CFA Level II Vignettes Ethics Standards Client Suitability MCQs Test 2

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