Edward, CFA, heads the settlement department of a fund management company. His wife, Fiona, works foran investment bank. Edward accidentally overhears an acquisition deal that Fiona is working on. The dealis soon to be closed and announced publicly. Edward checks subsequently neither the stock of the targetcompany nor its call option falls in the restricted list of his employer. To maximize the upside, he buys thecall option but he loses money on it because it coincides with the market plunge due to rising interest rate.A) Please discussion the following:Which CFA Standard of Professional Conduct does the case relate to?B) Explain whether each of I, II, III & IV below is correct or incorrect separately with respect to the relevantStandard. State the key points of the case that relate to the relevant Standard in your own words.Edward's purchase of the call option is:I. acceptable because he is just working in the settlement department, but not the investment department, ofthe fund management company.II. acceptable because he is not making money on the trade.III. acceptable because he is only buying the call option of the target stock, not the stock itself.IV. unacceptable.

The Code of Ethics and Standards of Professional Conduct of the CFA Institute is a set of ethical…

Answered: Edward, CFA, heads the settlement…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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