Challenges faced by professionals to display ethical behavior include: 1) overestimating one’s morality and 2) underestimating the effect of situational influences.
Ethical And Professional Standards MCQ - Ethical And Professional Standards Section 1
Statement B is incorrect because loyalty can have both positive and
negative effects towards one’s behaviour. Statement C is incorrect
because processes focused solely on compliance oversimplify decision
making and that does not necessarily help the larger cause.
Statement A and B are valid reasons for trust being important in the
investment profession. C does not represent a reason why trust is
particularly important in the investment industry.
Statement A is incorrect because ethical firms enjoy lower costs as they
are not subjected to investigations by regulators. Statement B is incorrect
because when investors lose trust, they expect higher returns for their
capital, which in turn increases the cost for borrowers.
Statement B is incorrect because ethical conduct requires a professional
to go beyond what is legally required. Statement C is incorrect because a
professional should minimize the risks of all stakeholders such as the
employer, clients, family, and market participants.
