2020 Cfa Program Curriculum: Level 2, Volume 1


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© CFA Institute. For candidate use only. Not for distribution. ETHICAL AND PROFESSIONAL STANDARDS, QUANTITATIVE METHODS, AND ECONOMICS CFA® Program Curriculum 2020 • LEVEL II • VOLUME 1 © CFA Institute. For candidate use only. Not for distribution. © 2019, 2018, 2017, 2016, 2015, 2014, 2013, 2012, 2011, 2010, 2009, 2008, 2007, 2006 by CFA Institute. All rights reserved. This copyright covers material written expressly for this volume by the editor/s as well as the compilation itself. It does not cover the individual selections herein that first appeared elsewhere. Permission to reprint these has been obtained by CFA Institute for this edition only. Further reproductions by any means, electronic or mechanical, including photocopying and recording, or by any information storage or retrieval systems, must be arranged with the individual copyright holders noted. CFA®, Chartered Financial Analyst®, AIMR-PPS®, and GIPS® are just a few of the trademarks owned by CFA Institute. To view a list of CFA Institute trademarks and the Guide for Use of CFA Institute Marks, please visit our website at www.cfainstitute.org. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional should be sought. All trademarks, service marks, registered trademarks, and registered service marks are the property of their respective owners and are used herein for identification purposes only. ISBN 978-1-946442-82-6 (paper) ISBN 978-1-950157-06-8 (ebk) 10 9 8 7 6 5 4 3 2 1 © CFA Institute. For candidate use only. Not for distribution. CONTENTS How to Use the CFA Program Curriculum   Background on the CBOK   Organization of the Curriculum   Features of the Curriculum   Designing Your Personal Study Program   Feedback   ix ix x x xii xiii Ethical and Professional Standards Study Session 1 Ethical and Professional Standards   3 Reading 1 Code of Ethics and Standards of Professional Conduct   Preface   Evolution of the CFA Institute Code of Ethics and Standards of Professional Conduct   Standards of Practice Handbook   Summary of Changes in the Eleventh Edition   CFA Institute Professional Conduct Program   Adoption of the Code and Standards   Acknowledgments   Ethics and the Investment Industry   Why Ethics Matters   CFA Institute Code of Ethics and Standards of Professional Conduct   Preamble   The Code of Ethics   Standards of Professional Conduct   5 5 6 6 7 9 10 10 11 11 15 15 15 16 Guidance for Standards I–VII   Standard I: Professionalism   Standard I(A) Knowledge of the Law   Guidance   Recommended Procedures for Compliance   Application of the Standard   Standard I(B) Independence and Objectivity   Guidance   Recommended Procedures for Compliance   Application of the Standard   Standard I(C) Misrepresentation   Guidance   Recommended Procedures for Compliance   Application of the Standard   Standard I(D) Misconduct   Guidance   Recommended Procedures for Compliance   Application of the Standard   21 21 21 21 26 27 30 30 35 36 43 43 46 48 53 53 54 54 Reading 2 indicates an optional segment ii © CFA Institute. For candidate use only. Not for distribution. Contents Standard II: Integrity of Capital Markets   Standard II(A) Material Nonpublic Information   Guidance   Recommended Procedures for Compliance   Application of the Standard   Standard II(B) Market Manipulation   Guidance   Application of the Standard   Standard III: Duties to Clients   Standard III(A) Loyalty, Prudence, and Care   Guidance   Recommende