This question-specific review guide is tied to the answer reasoning for a PracticeTestVault item. Use it after you answer the question so the review stays focused on what the prompt actually tested.
What this question is testing
Objective: Ethical and Professional Standards
Prompt focus: An analyst receives material nonpublic information about an issuer from a corporate insider during a private dinner. Under the CFA Institute Standards of Professional Conduct, what is the analyst's most appropriate course of action?
Why the correct answer works
Refrain from trading or causing others to trade in the related securities until the information is publicly disseminated
Correct. Standard II(A) requires members possessing material nonpublic information to not trade or induce others to trade until the information is made public.
Why the tempting wrong answer fails
Incorrect. A member should not disclose the information; the proper action is to encourage the issuer to make it public and to refrain from trading.
Plain-language takeaway
Standard II(A) Material Nonpublic Information prohibits acting or causing others to act on such information. The member must not trade until the information becomes public, and selectively disclosing it would itself be a violation.
Simple analogy
Think of ethical and professional standards like following a short checklist: identify the clue, confirm the rule, and then make the move that fits this exact scenario.
How to review it before a retake
- Underline the command word and name what the question is asking before rereading the choices.
- Compare the correct answer against the closest distractor and write the exact detail that separates them.
- Retest this objective with a fresh question without looking at the rationale first.