Q.1 Answer the following:a) Jim Tang, CFA, is a sell-side investment analyst. While at a software industry conference, Tang hears rumors that Blue Run Software may have falsified its financial results. When he returns to her office, Jim conducts a thorough analysis of Blue Run. Based on her research, including discussions with some of Blue Run's customers, Tang is convinced that Blue Run's reported 50% increase in net income during recent quarters is completely fictitious. So far, however, Tang is the only analyst suspicious about Blue Run's reported earnings. According to the CFA Institute Code of Ethics and Standards of Professional Conduct, the least appropriate action for Tang is to...(only one possible answer)Report her suspicions to Blue RunDo nothing until other analysts support her analysis.Recommend that her clients sell their Blue Run shares immediately.None of the above.b) Nick Bolton, CFA, acts as an outside portfolio manager for a Swiss wealth fund. Ralph Bonatti, a fund official, approaches Bolton to interest him in investing in the Scarlet Construction Company. He tells Bolton if he approves a two million dollar investment in Scarlet by the fund, Bolton will receive a "bonus" that will make him wealthy. Bonatti also adds if Bolton decides not to invest, he will lose the fund account. After a simple analysis, Bolton determines the investment is too risky for the fund. If Bolton still decides to invest, what Standard is least likely to be violated?(only one possible answer)Diligence and Reasonable BasisLoyalty, Prudence, and CareAdditional Compensation ArrangementsNone of the above.

As Jim Tang is an analyst and he found fictitious increase of 50% in net income

Answered: According to the CFA Institute Code of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Q.1 Answer the following:

a) Jim Tang, CFA, is a sell-side investment analyst. While at a software industry conference, Tang hears rumors that Blue Run Software may have falsified its financial results. When he returns to her office, Jim conducts a thorough analysis of Blue Run. Based on her research, including discussions with some of Blue Run's customers, Tang is convinced that Blue Run's reported 50% increase in net income during recent quarters is completely fictitious. So far, however, Tang is the only analyst suspicious about Blue Run's reported earnings. According to the CFA Institute Code of Ethics and Standards of Professional Conduct, the least appropriate action for Tang is to...

(only one possible answer)

Report her suspicions to Blue Run
Do nothing until other analysts support her analysis.
Recommend that her clients sell their Blue Run shares immediately.
None of the above.

Nick Bolton, CFA, acts as an outside portfolio manager for a Swiss wealth fund. Ralph Bonatti, a fund official, approaches Bolton to interest him in investing in the Scarlet Construction Company. He tells Bolton if he approves a two million dollar investment in Scarlet by the fund, Bolton will receive a "bonus" that will make him wealthy. Bonatti also adds if Bolton decides not to invest, he will lose the fund account. After a simple analysis, Bolton determines the investment is too risky for the fund. If Bolton still decides to invest, what Standard is least likely to be violated?

(only one possible answer)

Diligence and Reasonable Basis

Loyalty, Prudence, and Care

Additional Compensation Arrangements

None of the above.

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