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Chartered F***in’ Analyst on Material Non-Public Information

We have updated our site to include a history of all our past CFA Exam prep questions and study guides.

Material Non-Public Information Sample Question

Couric Noriega, CFA, is a citizen of Emerging Market Country (EMC) with no securities laws which govern the use of insider information. Ms. Noriega has clients in both Emerging Market Country and Neighboring Market Country, the latter of which has liberal securities laws with respect to the use of material non-public information. Should Couric Noriega come into the possession of material non-public information, she should:

A) Inform all her clients to assure she maintains the standard of Fair Dealing and then treat them all to a gratis meal from the Hamburguesa stand.
B) Trade on her personal account to lock down some sweet gains, and then inform all her clients of the information and guarantee them a rate of return of “Really High.” The Priority of Transactions states that a CFA holder should always put their own gains before their clients’ gains, and their clients’ gains before the law.
C) All of the above.
D) Only B.

Answer: D. While on past tests the appropriate answer would have B, and D would have made no sense or been at best redundant, the CFA institute has changed the bylaws so that when answering a question with two equally right answers, one of the two equally right answers will be arbitrarily chosen as the “correct answer.” In this case, it should have been apparent that it was D.

A is a misleading correct answer because while Couric Noriega upholds the correct standard of Fair Dealing, the distribution of hamburguesas could be seen as being used to unduly influence her clients and must be disclosed in writing to her employer, her employer’s employer and any relevenant regulatory bodies.

Chartered F***in’ Analyst

As an aid to prospective Chartered Financial Analysts who seek to take the CFA Exam for Level I, Level II or Level III this December or next May or next Never-ever, Long or Short has designed a series of review questions to further your edification and help you get an A++ on a pass/fail exam.

Ethics Example Scenario:

Alfonso Gonchar is a trust investment officer at a bank in a Richpersonsburg. He enjoys lunching every day with friends at Richpersonsburg’s The Country Club, where his clients have observed him having numerous drinks. Back at work after lunch, he is clearly intoxicated while making investment decisions. His colleagues make a point of handling any business with Alfonso in the morning because they distrust his judgement after lunch.


Past exams would have stressed how Alfonso is violating ethical standards by acting unprofessionally, raising questions about his competence and misrepresenting his firm and his entire profession in front of clients. This is incorrect.

This is actually a scenario designed to demonstrate the importance of teamwork as set out in Standard VII (c(a)) Appendix Y. The last line gives this away by showing the floor of what colleagues should do to help a coworker out, e.g. scheduling the work day around their colleague’s expected level of net intoxication (ELNI). The formula for this is:

(# of beers divided by body weight) divided by duration of drinking in hours

This formula should be memorized and used according to this schedule of recommended actions:

  • An ELNI of 0.15-0.30 suggests a recommended course of business as usual and covering the fact that Alfonso is wearing sunglasses in the office by saying he has “glaucoma.”
  • An ELNI of 0.30-0.40 would be a situation where 1) it is appropriate to schedule around the Alfonso’s level of intoxication and/or 2) to begin doing firmwide shots of Jaegermeister so that Alfonso’s ELNI stands out less. Remember the core CFA tenant — “We work as one, thus we must drink as one.”
  • An ELNI of 0.40+ requires everyone to 1) drink heavily and more importanly, immediately and to 2) clear the schedule and go out and play mini-baller roulette.

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