Ethics -- Athena Topic Test

CFA Level III Ethics
#1

Seems like a common-sense question:

  • Most firm clients are “local” (assume US), but a few in Europe, and it plans to enter Asia in the future.
  • All parts of new local ALM regulations are part of new European ALM regulations and Singapore’s AML regulations.

Which region’s regulation must they follow? Answer: Europe, because it is stricter.

Have read 5 times. How is Europe stricter? Perhaps “are part of” means Europe must have additional binding regulations. For sure it might, but not sure that’s necessarily so.

#2

Singapore regulations are NOT to be followed because the firm does not CURRENTLY have clients based in Singapore.

European regulations ARE to be followed because of the below statement:

"all of the local requirements are part of regulations recently introduced in Europe"

The statement correctly hints that European regulations have more regulations than local regulations. [Local <= Europe].

It can be rephrased into:

"Part of regulations recently introduced in Europe comprises of all of the local requirements"

#3

The writer of the case study could also have used the word “comprise” instead of “are”, which would have made the statement more understandable.

#4

I think my intuition was that more rules ≠ stricter in all cases – it’s harder to join a private club with 4 strict membership rules than to swim at a public pool with 30 rules.

But that’s intuition and this is math. Europe has 100% of the US rules, so if it has even one other obscure clause around Flemish translations during full moons in leap years, that is stricter.

Cheers.