Skip to content

CFA Level I · CFA Level I Exam

Guidance for Standard I: Professionalism for CFA Level I

Standard I: Professionalism has five parts: Knowledge of the Law, Independence and Objectivity, Misrepresentation, Misconduct and Competence. Each sets a duty for Members and Candidates. To solve questions, find the facts, name the Standard that applies, compare the conduct with its wording, and pick the answer that follows the stricter, more ethical path.

What this chapter covers

Standard I is the first of seven Standards in the CFA Institute Code of Ethics and Standards of Professional Conduct. It covers the basic duties of a professional: follow the law, stay independent, tell the truth, behave with integrity, and keep your skills current. The five parts are I(A) Knowledge of the Law, I(B) Independence and Objectivity, I(C) Misrepresentation, I(D) Misconduct and I(E) Competence.

The exam does not ask you to recite the Standards. It gives you a short case and three options, and you decide whether a Standard was violated or which action is correct. So you need the official wording, the meaning of key terms such as knowingly and reasonable care, and the recommended procedures in the guidance, including dissociation and escalation.

This chapter links to the rest of the paper in two ways. Ethical and Professional Standards is a full topic area in its own right. The same Standards also appear in cases on research reports, client communication and conflicts of interest, which involve Standards II to VII. The Global Investment Performance Standards (GIPS) are a separate reading in the same topic area. Learn Standard I well and the later Standards feel like extensions of it.

Ethical and Professional Standards carries one of the largest topic weights on the Level I exam (10-15% under the 2027 curriculum), and every question counts equally with no penalty for a wrong answer. Standard I cases are short and the wording is fixed, so this is one of the most learnable areas in the curriculum. Candidates who treat it as common sense often lose marks to subtle traps. Candidates who learn the wording and the logic collect steady, repeatable marks and save time for calculation-heavy topics.

Guidance for Standard I: Professionalism: topics in the order to study them

  1. 1Standard I(A) Knowledge of the LawStart here because it deals with compliance with law and with the Code and Standards: follow the stricter of the law and the Code and Standards, and do not knowingly participate in or assist a violation. The guidance recommends that you dissociate from the activity if you cannot stop it.
  2. 2Standard I(B) Independence and ObjectivityIt builds on I(A) by showing how pressure from gifts, clients, employers or issuers can compromise your judgement, and it links to later conflict-of-interest Standards.
  3. 3Standard I(C) MisrepresentationLearn it after I(B) because many misrepresentation cases come from research and client communication, including plagiarism and misleading performance claims.
  4. 4Standard I(D) MisconductIt is short and broad, so it is easiest to separate from I(C) once you know what misrepresentation covers.
  5. 5Standard I(E) CompetenceStudy it last because it is short and you can read it against the other four parts to see how it differs.

How to prepare Guidance for Standard I: Professionalism

Plan for repeated short sessions instead of one long read. The material suits phone study during a commute, as long as you practise with cases.

  1. Read the official text of each Standard in I(A) to I(E) slowly, one at a time. Write the key duty of each in one line of your own.
  2. Learn the exact trigger words: knowingly in I(A) and I(C), and reasonable care and judgement in I(B). Many wrong options fail on these words. Also learn that dissociation and escalation are recommended actions in the I(A) guidance, not words in the Standard text.
  3. Read the guidance and recommended procedures for compliance, then ask what a compliant professional would do in practice.
  4. Do case questions in small sets. For each, say which Standard applies before you look at the options.
  5. Eliminate options in two passes: first remove the one that clearly breaks a Standard, then compare the other two against the stricter-rule principle.
  6. Keep an error log with the Standard, the trap, and the correct reasoning. Review it every few days.
  7. Take mixed ethics sets that include Standards II to VII so you practise choosing the right Standard, not only applying it.

Common mistakes in Guidance for Standard I: Professionalism

  • Applying local law only and ignoring the Code and Standards

    Fix: Remember I(A): you must comply with the stricter of applicable law and the Code and Standards. Legal conduct can still violate the Standards.

  • Mixing up I(C) Misrepresentation and I(D) Misconduct

    Fix: Use I(C) when the issue is a false or misleading statement about analysis, recommendations or professional activities. Use I(D) for broader dishonest or damaging conduct, such as fraud or deceit.

  • Ignoring the word knowingly in I(C)

    Fix: Read the word knowingly, but do not stop there. The guidance also treats omitting key facts and recklessly stating unverified information as misrepresentation, and intent to deceive is not required. Check what the person knew and what care they took before deciding.

  • Treating gifts as always prohibited under I(B)

    Fix: The test is whether the gift or benefit could reasonably be expected to compromise independence or objectivity. Look at value, timing and context, and note that disclosure and employer approval are part of good practice.

  • Staying passive when a colleague violates the law

    Fix: I(A) prohibits knowingly participating or assisting in a violation. The guidance says that when a colleague violates the law, you should dissociate from the activity, and escalate to supervisors or compliance and document. Look for answers that include stopping your involvement and taking these steps.

  • Using memory instead of the official wording

    Fix: Revise from the official text and its key phrases. Exam options are written to be close to the wording, so small differences decide the answer.

Last-day revision: Guidance for Standard I: Professionalism

  • I(A): understand and comply with all applicable laws, rules and regulations, including the Code and Standards.
  • I(A): when rules conflict, follow the stricter law, rule or regulation.
  • I(A): do not knowingly participate or assist in any violation of laws, rules or regulations by others. The guidance recommends that you dissociate from the activity if you cannot stop it, and that you escalate to supervisors or compliance and document. These are recommended procedures, not requirements of the Standard text.
  • I(B): use reasonable care and judgement to achieve and maintain independence and objectivity.
  • I(B): do not offer, solicit or accept any gift, benefit or compensation that could reasonably be expected to compromise independence or objectivity.
  • I(C): do not knowingly make any misrepresentation relating to investment analysis, recommendations, actions or other professional activities.
  • I(C): using others' work without credit is misrepresentation, so plagiarism is a violation.
  • I(D): do not engage in conduct involving dishonesty, fraud or deceit, or any act that reflects adversely on your professional reputation, integrity or competence.
  • I(E): make reasonable efforts to maintain and improve your competence. Check the official text for the exact wording.
  • Name the Standard first, then test each option against its wording.
  • When two options seem acceptable, choose the one that is more cautious, more transparent or follows the stricter rule.
  • There is no penalty for wrong answers, so never leave an ethics question blank.

Guidance for Standard I: Professionalism practice questions

Guidance for Standard I: Professionalism in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Guidance for Standard I: Professionalism: frequently asked questions

What does Standard I: Professionalism cover?

It has five parts: I(A) Knowledge of the Law, I(B) Independence and Objectivity, I(C) Misrepresentation, I(D) Misconduct and I(E) Competence. Together they cover compliance, independent judgement, honesty and keeping your skills up to date.

Is the Code and Standards text tested word for word?

No, the exam is case-based with three options. But the options are built around the official wording, so you must know the key phrases well enough to spot small differences.

What should I do if the law and the Code and Standards conflict?

Under I(A), you must comply with the stricter of applicable law and the Code and Standards. If local law is less strict than the Code and Standards, you must still meet the Code and Standards. If the law is stricter, you follow the law.

How much time should I spend on this chapter?

It is a high-return area because the rules are fixed and the cases are short. Aim to read the text once, then spend most of your time on case questions and your error log.