PROFESSIONAL ETHIC AND GOVERNANCE APRIL 2022 PAST PAPER

MONDAY: 4 April 2022. Afternoon paper.                                                                                            Time Allowed: 3 hours.

Answer ALL questions. Marks allocated to each question are shown at the end of the question. Do NOT write anything on this paper.

QUESTION ONE

1.          The code of ethics and standards are intended to guide the investment professionals as well as all participants in the investment industry to identify, promote and follow high ethical standards. With reference to the above statement, explain five fundamental ethical and professional principles that are applicable to the investment industry professionals.                                                (10 marks)

2.         Examine four threats to ethical behaviour that financial analysts should avoid while carrying out their duties. (4 marks)

3.         Carol Gillian states that the post-conventional level of moral thinking can be dealt based on the two types of thinking namely; care-based morality and justice-based morality.

In light of the above statement, outline three principles of:

Care-based morality.                                (3 marks)

Justice-based morality.                                (3 marks)

(Total: 20 marks)

 

QUESTION TWO

1.         Examine four ways of enhancing ethics and trust in the investment industry.                (4 marks)

2.         Summarise six forms of investment frauds.                (6 marks)

3.         Explain three characteristics of a professional in the investment world.                (6 marks)

4.         Outline four fiduciary obligations of a financial analyst to clients.                (4 marks)

(Total: 20 marks)

 

QUESTION THREE

1.         The Global Investment Performance Standards (GIPS) were created to provide an ethical framework for the calculation and presentation of the investment performance history of an investment management firm. In view of the above statement, outline four objectives of the GIPS standards.                                                                                                                                                               (4 marks)

2.          Examine three benefits of complying with the Global Investment Performance Standards (GIPS) to the following market players:

Asset owners.                                                                                                                                                                                                        (3 marks)

Prospective clients and investors.                                (3 marks)

Explain five principles of corporate governance in the investment world.                (10 marks)

(Total: 20 marks)
QUESTION FOUR

1.          During a finance seminar, a financial analyst of Hakika Ltd. stated that it is important for chief executive officer (CEO) to have emotional intelligence.

In view of the above statement, explain four benefits of emotional intelligence to a leader.                                               (8 marks)

2.           Summarise five roles played by the board in the Enterprise Risk Management (ERM) process.                                       (5 marks)

3.           Outline four components of financial reporting.                                                                                                                (4 marks)

4.          Examine three benefits of using case studies in dealing with professional values and ethical dilemmas.                           (3 marks)

(Total: 20 marks)

 

QUESTION FIVE

1.           Explain the following theories as used in corporate governance:

Agency theory.                                                                                                                                                  (3 marks)

Stewardship theory.                                                                                                                                           (3 marks)

Stakeholder’s theory.                                                                                                                                          (3 marks)

Resource dependence theory.                                                                                                                             (3 marks)

2.          There are a number of ways of resolving stakeholders’ conflict.

In relation to the above statement, examine four ways of resolving conflict according to Cyert and March.   (4 marks)

3.           Summarise four roles of institutional investors in corporate governance.                                                                          (4 marks)

(Total: 20 marks)

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