CFA Level I Prep - The Importance of the Ethics Section

The CFA Institute prides itself on promoting a culture of higher standards among those who work in the investment industry. The capital markets require the underpinning of a financial system built on trust, and the CFA Institute sets a higher bar of ethical behavior to support market integrity and sustainability.

Although the topic of Ethical and Professional Standards only accounts for 15 percent of the weight on the exam, it’s extremely important that you pass. Here’s why, if your overall score is right on the bubble for the minimum level to pass, then you will need a score above 70 percent in the ethics section in order to pass the exam.

You MUST first know the Standards of Professional Conduct:

I. Professionalism
II. Integrity of Capital Markets
III. Duties to Clients
IV. Duties to Employers
V. Investment Analysis, Recommendations, and Action
VI. Conflicts of Interest
VII. Responsibilities as a CFA Institute Member or CFA Candidate

Fully understanding the aforementioned Standards will help provide a better understanding of the broader ethics-related issues. It’s very important that you work through the examples provided in the text, since they serve as an excellent proxy for what to expect on the exam.

I started my preparation with ethics mostly as a confidence builder, but also looked at the material a couple of times when I needed a break from more demanding sections.

This kept it fresh enough so that I didn’t need any additional time for this topic during those last few weeks before the exam. Given its importance, make sure that you fully understand this material, and score well on the practice questions. This section will easily trip up candidates that treat this topic casually.

The test questions are often somewhat trickier then many expect, so make sure to read each question carefully. Although controversial, consider looking at these questions again if you have extra time on exam day.

Stay positive and keep your eyes on the prize.

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