Ethical and Professional Standards Q117

117Cora Bentley works for an investment counseling firm. She is approached by a new client Sue Grey for financial advice. Bentley very enthusiastically explains to her how she can increase her return by investing in a few small-cap stocks that are selling at a discount in the market. Has Bentley committed a violation of the CFA Institute Standards?

A
No.
B
Yes, Bentley should have explained her qualifications, her education, and experience and the meaning of her CFA Designation.
C
Yes, Bentley should have determined Grey‟s needs, objectives, tolerance and risk before making any recommendations.

Option : C
Explanation : Bentley should determine whether the investment is suitable to the client’s financial situation. She should make an inquiry into the risk and return objectives of the client before making any recommendations. Refer to Standard III(C) Suitability.

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