CFA® Ethics & Standards Questions: How to Find the Correct Answers!

This page is split into two clearly separated parts: FinQuiz Editorial Additions and the Original Guest Post (Text Unchanged). Part of our restored ethics series, alongside the 10-Minute Review of the Standards.

Read the Original Guest Post Level I Resources FAQ
On this page FinQuiz Editorial Additions (2026 update) Recommended Level I resources Original Guest Post (Text Unchanged) FAQ

Disclosure

  • The guest author does not endorse FinQuiz products.
  • FinQuiz editorial additions are separate from the original guest post.
  • Promotional download lines that had been inserted into the guest text have been removed; the author’s words are otherwise preserved exactly, with no links added.

FinQuiz Editorial Additions (2026 Update)

This section is written by FinQuiz editors. The guest post below teaches something that has not changed at all—how CFA Institute writes ethics questions and how to find the correct answer—against a backdrop of numbers and formats that have. Here is the 2026 context.

His warning got stronger, not weaker: the post pegs Ethics at 10–15% of your score. Today Ethics is the largest topic at Level I, at 15–20%—roughly 27 to 36 of the 180 questions—and still 10–15% at Levels II and III. The candidate who thinks “I’m an ethical person, the answers will be obvious” is walking past more free points than ever.

What has changed since this post

  • Topic weight up at Level I: 15–20% now, the biggest single block on the exam—his “carry points across all three exams” argument compounds accordingly.
  • The ethics adjustment still applies: for candidates scoring near the passing standard, Ethics performance can tip the result either way—the exam’s designers agree with Joseph about where the deciding points live.
  • Format: Level I is now 180 multiple-choice questions on computer in two 135-minute sessions; his “vignette” framing applies most directly to the item sets you will meet at Levels II and III.
  • The framework is intact: six components of the Code, seven Standards—his SPAMED acronym and the standard-by-standard review below still map onto the current curriculum. Guidance wording and examples evolve by edition, so use the post for orientation and your current curriculum for exact details.
  • Reading order for our ethics series: start with the 10-Minute Review of the Standards for the framework, use this post for question-answering strategy, and see the additional-material review for what happened to GIPS and the retired supplementary standards.

Recommended Level I resources (FinQuiz)

Only Level I resources are promoted in the editorial areas of this page.

Practical pairing: Do a timed block of ethics questions, then re-read only the Standards you missed. Joseph’s point—learning how the wrong answers are built—happens in the review, not the attempt.

Original Guest Post (Text Unchanged)

Disclosure: The guest author does not endorse FinQuiz products. The content below is displayed with no edits, no paraphrasing, and no reordering—except that promotional download lines inserted into the guest text have been removed. No links have been added into the author’s text.

Even with the change to topic area weights on the CFA exams this year, CFA Ethics and Professional Standards remain extremely important. It is a lot of material but fortunately doesn’t change much from year to year and you’ve got a real opportunity to carry over some points to each exam if you learn it early.

9 Tips to Nail the CFA Program Ethics & Standards!

Before we get into a quick review of the key points I want to stress one thing: Do NOT underestimate the topic area and the need to work practice problems! The topic is worth between 10% and 15% of your total score on each exam. A lot of candidates scan the readings and then neglect doing any real studying or problems. The problem is that the Ethical and Professional Standards all seem pretty obvious. Everyone knows you shouldn’t take advantage of clients and trade on inside information. Candidates look at the material and think, “I’m a pretty ethical person. I don’t lie, cheat or steal. The correct answer on the exam will be obvious to me.” Then they get to the exam and have a heart attack! The CFA Institute is surprisingly good at designing questions where two of the answer choices seem possible, even to someone with a good moral compass. That is why it is absolutely a must to work practice problems in the topic area. Learn how the Institute writes out the vignette and what to look for in the correct answer.

The Professional Conduct Program (PCP)

The PCP is not usually a big focus of the exams but you might get a question. Remember where the complaint can come from: media scrutiny, exam proctors, written notes or self-disclosure. Understand that while your subordinates might not be held to the Code and Standards, a supervisor with the CFA designation is still responsible for their actions. After an inquiry is started, information is collected and one of three outcomes occurs. There may be no sanctions recommended, a cautionary letter could be issued or the inquiry is sent to the next level for further work. You can accept or contest the outcome and request that it be escalated to a panel.

Components of the Code – CFA Ethics

I’ve always used the acronym SPAMED to remember components of the code. The truth is that you probably won’t get a question on one of the six codes but will instead see questions on application of the Code and Standards.

  • Subordinate personal interests
  • Promote the integrity of and uphold rules governing capital markets
  • Act with integrity, competence, diligence and respect
  • Maintain and improve professional competence
  • Exercise reasonable care and independent judgment
  • Demonstrate ethical practice and professionalism

I’ve run through the standards below. This is a very brief overview and hits on just the bullet points. You still will need to read through the curriculum to get the detail and make sure to work those problems.

Standard I Professionalism – CFA Ethics

Remember that you are bound my the most strict law between the code and local laws. If the local law allows something that the code and standards do not, you must still follow the code and standards. Ignorance is no excuse either. If you should have known that an action was breaking the law or was unethical, then you could be punished for it. This is an important concept in the supervisory section. Know the procedure for informing supervisor, firm and compliance about any activities. You are not required to inform law enforcement, unless the law requires it, but you do need to disassociate from the firm and activities if they are not corrected.

Independence & Objectivity

  • Pay your own expense to meetings and other trips when possible. Do not accept anything more than a token gift from a third-party. The Institute does not put a dollar value on what is considered token but a non-token gift on the exam will probably be something costing more than a few hundred dollars.
  • Issuer-paid research must be disclosed and should only be on an upfront fee. Ratings cannot be tied to the payment or promised in any way.

Misrepresentation

  • No returns can ever be guaranteed unless the investment is backed by the government or an institution backs losses.
  • Informational sources must be directly credited and not listed generically as “analysts” or “experts”

Misconduct

  • You must not engage in something, even if it is legal, that may reflect poorly on the CFA designation or on your firm. Drinking alcohol is the most often used example. You are legally-able to drink but if excessive drinking leads to a loss of confidence then it could be punishable under the code.
  • Civil disobedience is not misconduct, i.e. protesting

Standard II Integrity of Capital Markets – CFA Ethics

Use of material, non-public information (insider trading) is a big issue and you could see questions on the exam. Remember that the info must be BOTH material and non-public.

  • You can use the mosaic theory to use non-public/non-material information or material/public information
  • You must not ‘cause’ others to use material, non-public information either, i.e. giving someone a tip about the info.
  • Company conference calls and meetings are not a public release and should be made public at the same time.

Standard III Duties to Clients – CFA Ethics

Remember the chain of priorities for duties: Client, Firm, Self

Fair Dealing

  • All clients must be treated fairly and equally. You can offer different service levels but they must be disclosed and available to everyone
  • Allocations should be on a pro-rata basis and only to suitable portfolios
  • The method of communication is important. You cannot send a traditional mail update to some and make a personal phone call to others. Contact methods must be uniform across all clients.

Suitability – Understand each client’s risk tolerance and return requirements, along with objectives and constraints to determine suitability. Investment suitability should be judged in the whole portfolio context.

Performance Presentation must be (FACT) Fair, Accurate, Complete and Timely

Standard IV Duties to Employers – CFA Ethics

Loyalty

  • You must not take any records, files or other company property when your contract is terminated with an employer. Besides being punishable under the code, you will also likely be criminally prosecuted. You can reconstruct the material from memory but cannot use any tangible records.
  • Any preparation for another job or information can be made before leaving your current employer but must be done on your own time.

Additional Compensation

  • You must get written consent from all parties before taking additional compensation that could create a conflict with your employer. It must be in writing and from everyone (employer and other third-party).

Supervisor Responsibilities

This is another big one on the exams but can be confusing. Understand that supervisors must have procedures in place so they know what their subordinates are doing. Again, not knowing is not an excuse if appropriate policies would have uncovered the activity.

  • You must inform the company in writing of any insufficient compliance policies and decline a supervisory position until the procedures are improved.
  • You are responsible, under the code, for the activities of non-charterholder subordinates as well

Standard V Investment Analysis, Recommendations and Actions – CFA Ethics

  • You must not rely on outside information unless it can be verified and you trust the reliability of the source.
  • You can be a part of a group and not agree with a recommendation but you should document your disagreement

Communication with Clients

  • You must distinguish between fact and opinion when talking with clients or potential clients
  • A statement of the basic factors and process you used to arrive at a recommendation must be disclosed

Record Retention

  • Keep all records and analysis for seven years
  • Records are the property of your employer and its responsibility if you leave the firm

Standard VI Conflicts of Interest – CFA Ethics

  • You must disclose any material ownership or ownership of anyone living in your household. The Institute does not put a dollar amount on ‘material’ but it will likely be more than a couple thousand dollars or a significant control over business decisions
  • Remember , disclosures must be made for any actual or potential conflicts

Priority of Transactions

  • Remember the priority list: Client, Firm and then Self. Clients should get all requested (if suitable) shares, followed by Firm and yourself only if there is enough leftover.
  • Family members not living in your household should be treated fairly as clients. Only those living with you are considered related-parties and treated as yourself.
  • Oversubscribed investments should be distributed on a pro-rata basis in priority order (clients first)

Referral Fees

  • Any compensation for referral must be disclosed, including non-monetary benefits

Standard VII Responsibilities of charter holders and candidates – CFA Ethics

  • The CFA designation can only be used by a person and cannot be used on company letterhead or attached to the company’s logo.
  • Your dues must be up-to-date and you must sign the annual standards compliance to use the designation

Memorizing the Code and Standards is not enough. You need to understand the intent behind each key point and be able to apply it given a situational problem. Again, the best way to learn this is by doing practice problems. It isn’t too difficult once you’ve learned how questions are asked and the reasoning behind the correct answer. The great part is that if you learn this material while studying for the CFA Level I exam, you’ve pretty much got 10% of free points on the other two exams.

‘til next time, happy studyin’

You may also like: Ethics Practice Roundup!

Written by Joseph Hogue, CFA

Related Blog Posts

FAQ (Global candidates)

How much is Ethics worth on the CFA exams now?

More than when this post was written. Ethics and Professional Standards now carries a 15–20% weight at Level I—the largest topic block on the exam, roughly 27 to 36 of the 180 questions—and 10–15% at Levels II and III. The post’s 10–15% figure was right for its era, but its core argument has only strengthened: this is the last topic a candidate can afford to underestimate.

Does the 'ethics adjustment' for borderline candidates still exist?

Yes. CFA Institute still applies special consideration to candidates whose total scores sit close to the passing standard: strong performance on Ethics can tip a borderline result to a pass, and weak performance can do the opposite. Combined with the higher Level I weight, it makes Joseph’s insistence on real ethics practice—not just a confident read-through—even better advice today than when he wrote it.

Are the Code and Standards summarized in this post still current?

The framework is unchanged: six components of the Code and seven Standards of Professional Conduct, so the post’s SPAMED acronym and standard-by-standard walkthrough still map onto today’s curriculum, and the Professional Conduct Program still operates. Guidance details do evolve edition by edition, though, so treat the post as orientation and take exact wording, thresholds, and examples from your current curriculum year.

What is the best way to practice CFA Ethics questions?

Exactly what the post prescribes: work enough exam-style problems to learn how CFA Institute constructs its almost-right wrong answers. Start with the official practice questions and mock exams included with your registration in the Learning Ecosystem—the curriculum’s own ethics examples are the closest thing to the real exam’s voice—then add timed mixed practice. Every free FinQuiz account also includes one full-length 180-question mock, whose ethics section shows you where you stand under exam conditions.