What to know
Identify the rule, formula, or decision criterion before reading the answer choices. CFA Level I distractors often use the right vocabulary with the wrong condition.
Ethical and Professional Standards
Standard IV(B): Additional Compensation Arrangements practice questions
Standard IV(B): Additional Compensation Arrangements is part of CFA Level I Ethical and Professional Standards. Ethics questions test judgment under the Code and Standards, especially duties to clients, employers, markets, and the CFA Program. Use this page to review the controlling ideas, then work through 1 question with answer explanations and common traps.
Review the worked explanations before moving into adaptive practice. The app version can mix this topic with due reviews and weak related concepts.
Practice this topicHow to practice
Work each item under time pressure, then compare your reasoning with the step-by-step explanation and key takeaway.
Review signal
Missed questions should become scheduled reviews when the error comes from a concept gap, formula setup, or answer-choice trap.
Ethical and Professional Standards
Standard IV(B): Additional Compensation Arrangements
A client offers her portfolio manager a performance bonus payable personally if the account beats its benchmark by 300 bps. The advisory contract does NOT mention this arrangement. The manager tells the client he is grateful and emails his supervisor after the bonus period begins. The manager most likely violates the Standards because he:
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