CFA Level II Vignettes Ethics Standards Material Information MCQs Test 2

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

Practice Quiz 2 for "Material Information" (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: Materiality Matters - William Harrison, CFA, is a healthcare analyst. He learns from a company insider that a new drug has passed a critical clinical trial with positive results, but the company has not yet announced this. Harrison purchases shares of the company. Has Harrison violated the Standards?

A. Acceptable because Harrison is not an employee of the companyB. Unacceptable because Harrison violated Standard II(A) by trading on material nonpublic informationC. Acceptable if Harrison does not tell othersD. Unacceptable only if the trial results are negative

2. Harrison receives a confidential analyst report from a friend that contains material nonpublic information about a company's restructuring. Harrison trades on this information. Which Standard has Harrison violated?

A. Standard III(A) - Loyalty, Prudence, and CareB. Standard III(C) - SuitabilityC. Standard II(A) - Material Nonpublic InformationD. Standard IV(A) - Loyalty to Employer

3. Harrison gathers information from public sources such as regulatory filings, press releases, and industry reports, and he also incorporates nonmaterial data like social media sentiment. He concludes a company is undervalued and recommends a buy. Has Harrison violated the Standards?

A. No violation, as the conclusion is based on a mosaic of public and nonmaterial informationB. Standard II(A) - Material Nonpublic InformationC. Standard III(C) - SuitabilityD. Standard VI(A) - Disclosure of Conflicts

4. Harrison learns of a pending merger and tells a client to buy the target company's stock before the announcement. Which Standard has Harrison violated?

A. Standard III(A) - Loyalty, Prudence, and CareB. Standard III(C) - SuitabilityC. Standard IV(A) - Loyalty to EmployerD. Standard II(A) - Material Nonpublic Information

5. Harrison overhears a company executive discussing an upcoming earnings shortfall that has not been publicly disclosed. Harrison sells the stock short. Which Standard has Harrison violated?

A. Standard III(A) - Loyalty, Prudence, and CareB. Standard II(A) - Material Nonpublic InformationC. Standard V(A) - Diligence and Reasonable BasisD. Standard VI(A) - Disclosure of Conflicts

General10 MCQs

6. Vignette 4: InsiderEthics - Patricia Sterling, CFA, is told by a company's CFO that the company will increase its dividend. The information is not yet public. Sterling buys the stock. Has Sterling violated the Standards?

A. Acceptable because the CFO is a credible sourceB. Acceptable if Sterling does not share the informationC. Unacceptable because Sterling violated Standard II(A) by trading on material nonpublic informationD. Unacceptable only if the dividend is not increased

7. Sterling receives confidential information about a company's CEO departure, which has not been announced. She tells her client to sell the stock. Which Standard has Sterling violated?

A. Standard II(A) - Material Nonpublic InformationB. Standard III(A) - Loyalty, Prudence, and CareC. Standard III(C) - SuitabilityD. Standard IV(A) - Loyalty to Employer

8. Sterling analyzes a company using public financial statements, industry trends, and customer feedback (nonmaterial). She concludes the company is overvalued and recommends a sell. Has Sterling violated the Standards?

A. Standard II(A) - Material Nonpublic InformationB. Standard III(C) - SuitabilityC. Standard V(A) - Diligence and Reasonable BasisD. No violation, as the conclusion is based on a mosaic of public and nonmaterial information

9. Sterling learns from a government official that a company is about to be awarded a large contract, before the announcement. Sterling buys the stock. Which Standard has Sterling violated?

A. Standard III(A) - Loyalty, Prudence, and CareB. Standard II(A) - Material Nonpublic InformationC. Standard V(A) - Diligence and Reasonable BasisD. Standard VI(A) - Disclosure of Conflicts

10. Sterling obtains confidential information about a company's restructuring. She tells her friend, who then trades on the information. Sterling does not trade. Which Standard has Sterling violated?

A. Standard III(A) - Loyalty, Prudence, and CareB. Standard III(C) - SuitabilityC. Standard II(A) - Material Nonpublic InformationD. Standard IV(A) - Loyalty to Employer

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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 Material Information MCQs Test 2

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