CFA Level II Vignettes Ethics Standards Wealth Management MCQs Test 2

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

Practice Quiz 2 for "Wealth Management" (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: Sterling Private Wealth - Emily Sterling, CFA, manages a concentrated portfolio for a client that consists of 65% in a single technology stock, 20% in technology ETFs, and 15% in cash. The client has a moderate risk tolerance. Sterling has made these recommendations over three years without rebalancing. Has Sterling violated the Standards?

A. Yes, because the overall portfolio is not diversified and exceeds the client's risk toleranceB. Yes, because technology stocks are inherently unsuitable for all investorsC. No, because each individual investment was recommended by the research teamD. No, because the client provided written consent for the strategy

2. Sterling discusses a client's significant investment losses at a dinner party with friends. While she does not mention the client's name, she mentions the client's profession, approximate portfolio size, and specific holdings. Has Sterling violated the Standards?

A. Yes, she violated Standard I(B) - Independence and ObjectivityB. Yes, she violated Standard III(A) - Loyalty, Prudence, and CareC. Yes, she violated Standard III(E) - Preservation of ConfidentialityD. No, because she did not mention the client's name or identifying details

3. Sterling plans to leave Sterling Private Wealth to start her own firm. Before resigning, she copies the client list, investment objectives, and contact information for her top 50 clients. She begins contacting these clients to inform them of her new venture. Which Standard has Sterling violated?

A. Standard III(A) - Loyalty, Prudence, and CareB. Standard IV(A) - Loyalty to EmployerC. Standard VI(A) - Disclosure of ConflictsD. Standard I(C) - Misrepresentation

4. Sterling receives a 5% commission from a real estate investment trust (REIT) for every client she refers to the REIT. She does not disclose this commission to her clients. Has Sterling violated the Standards?

A. No, because the compensation is disclosed to her employerB. No, because the client agreed to the fee arrangementC. Yes, for violating Standard III(A) - Loyalty, Prudence, and CareD. Yes, for violating Standard VI(A) - Disclosure of Conflicts

5. Sterling tells a prospective client, "I guarantee you will earn at least 10% annual returns with my investment strategy." She knows that no investment strategy can guarantee returns. Has Sterling violated the Standards?

A. Yes, she violated Standard V(B) - Communication with Clients and Prospective ClientsB. Yes, she violated Standard I(C) - MisrepresentationC. No, because the statement was made in good faithD. No, because the client understood the risks

General10 MCQs

6. Vignette 4: Beacon Wealth Management - James Beacon, CFA, manages portfolios for high-net-worth clients. Beacon purchases 5,000 shares of XYZ stock for his personal account at 9:45 AM. At 10:00 AM, he executes buy orders for his clients for the same stock. Has Beacon violated the Standards?

A. No, because the trades were executed on the same dayB. Yes, because clients should receive priority over personal trades under Standard III(A)C. Yes, but only if the stock price increased after his purchaseD. No, because the trades were of different sizes

7. Beacon places a personal trade ahead of a client trade for the same security. Which Standard has Beacon most likely violated?

A. Standard III(A) - Loyalty, Prudence, and CareB. Standard III(C) - SuitabilityC. Standard VI(B) - Priority of TransactionsD. Standard I(B) - Independence and Objectivity

8. Beacon presents portfolio performance to clients showing gross returns of 12% without deducting the 2% management fee. The net return was 10%. Which Standard has Beacon violated?

A. Standard I(C) - MisrepresentationB. Standard V(B) - Communication with Clients and Prospective ClientsC. Standard VI(A) - Disclosure of ConflictsD. Standard III(D) - Performance Presentation

9. Beacon receives an all-expenses-paid luxury vacation from a fund manager whose products he recommends to clients. Beacon does not disclose this gift to his clients. Which Standard has Beacon most likely violated?

A. Standard I(B) - Independence and ObjectivityB. Standard III(A) - Loyalty, Prudence, and CareC. Standard IV(A) - Loyalty to EmployerD. Standard VI(A) - Disclosure of Conflicts

10. Beacon spends three hours each day during work hours developing a personal financial planning business that competes with his employer. He uses the firm's computers and research database for this side business. Which Standard has Beacon violated?

A. Standard III(A) - Loyalty, Prudence, and CareB. Standard I(B) - Independence and ObjectivityC. Standard IV(A) - Loyalty to EmployerD. Standard VI(A) - Disclosure of Conflicts

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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 Wealth Management MCQs Test 2

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