Skip to content

CFA Level II · CFA Level II Exam

Guidance for Standard I: Professionalism for CFA Level II

Standard I: Professionalism has five parts: Knowledge of the Law, Independence and Objectivity, Misrepresentation, Misconduct and Competence. To solve questions, read the vignette, find the facts that show a possible breach, name the Standard, and pick the action that follows the Code and Standards exactly, not your own view.

What this chapter covers

Standard I is the first of seven Standards in the CFA Institute Code and Standards. It covers how you behave as a professional: following the law, staying objective, being honest about facts and credentials, avoiding misconduct, and keeping your skills sound. 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. I(E) was added in the 2020 edition, so older notes may show only four parts.

At Level II, Ethics is tested inside item sets. You get a vignette about a person or firm, often with several small events, and four questions. Each question asks whether a Standard was violated, which one, or what the person should do. You must find the relevant fact in the vignette and match it to the right Standard. Recall of the wording alone is not enough.

This chapter connects to the rest of the Ethics material. A single event can touch several Standards, for example a gift that hurts objectivity under I(B) and also needs disclosure under Standard VI. Learning Standard I well gives you the base for the later Standards and for the application cases you will see in the exam.

Ethical and Professional Standards carries a topic weight of 10-15% at Level II, among the highest of all topics. Standard I is a common area in ethics item sets, either as the main issue or as a second issue alongside another Standard. The content is limited, the rules are stable, and the questions reward careful reading. That makes it one of the most reliable places to gain points for the effort you put in. There is no minimum passing score per topic, but strong ethics results can offset weaker areas such as derivatives or quantitative methods.

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

  1. 1Standard I(A): Knowledge of the LawStart here because it sets the base rule: follow the stricter of law and the Code, and know what to do when they conflict or when others break the law.
  2. 2Standard I(B): Independence and ObjectivityIt covers gifts, compensation, research and issuer-paid work, which are common areas in vignettes, so study it while your attention is fresh.
  3. 3Standard I(C): MisrepresentationIt builds on honesty and covers plagiarism, performance claims and use of others' work, which are common in vignettes.
  4. 4Standard I(D): MisconductIt is short and broad, so it is easier once you know the more specific parts that often overlap with it.
  5. 5Standard I(E): CompetenceIt is the last of the five parts and is brief, so use it as a final check that you can separate it from the other Standards.

How to prepare Guidance for Standard I: Professionalism

Treat this chapter as a skill of matching facts to Standards. Reading the text once is not enough. You need practice with vignettes.

  1. Read each Standard's text first, then the guidance, and write one line for what it requires and one line for what it does not.
  2. For each part, list the typical situations: conflict with local law, gifts, issuer-paid research, copying a report, a criminal act, or acting beyond your skills.
  3. Learn the recommended procedures for compliance, since many answers ask what the firm or the member should do next.
  4. Practise with item sets. Underline the facts in the vignette that signal a breach, then name the Standard before you look at the options.
  5. Mark overlaps. Note where I(B) meets VI(A), or I(C) meets V(B), so you can pick the best answer when two seem possible.
  6. Review mistakes in a short log and re-read it two days before the exam.

Common mistakes in Guidance for Standard I: Professionalism

  • Choosing the option that follows local law when the Code is stricter.

    Fix: Always compare the law with the Code and pick the stricter path, as I(A) requires.

  • Treating every gift as a violation of I(B).

    Fix: Ask whether the gift could impair objectivity, and look for disclosure and firm policy in the vignette.

  • Confusing I(C) Misrepresentation with I(D) Misconduct.

    Fix: Use I(C) when a false or misleading statement about facts, work or credentials is made, and I(D) for broader dishonest or damaging conduct.

  • Naming only one Standard when the case involves two.

    Fix: After you spot the first issue, scan the vignette for a second fact, such as disclosure or record keeping.

  • Answering from personal ideas of right and wrong.

    Fix: Base each answer on the Standard and its guidance, not your own opinion.

Last-day revision: Guidance for Standard I: Professionalism

  • I(A): when law and the Code differ, follow the stricter one.
  • I(A): if you know of a violation by others, dissociate from it and consider whether to report it, as the guidance advises.
  • I(B): use reasonable care and judgment to keep independence and objectivity; do not let gifts or pressure sway your views.
  • I(B): issuer-paid research requires disclosure of the compensation arrangement.
  • I(B): gifts from clients should be disclosed to the employer. Gifts from parties seeking favourable treatment may compromise objectivity and should be avoided or disclosed to the employer.
  • I(C): do not misstate facts about your work, qualifications, services or performance.
  • I(C): attribution is required for others' work, ideas, models and summaries. It is not required for factual information from recognised statistical reporting services. Copying without credit is plagiarism.
  • I(C): do not claim a past record you did not earn.
  • I(D): do not engage in conduct involving dishonesty, fraud or deceit, or conduct that reflects adversely on your professional reputation, integrity or competence.
  • I(D): misconduct covers dishonest, fraudulent or deceitful acts, and other conduct that reflects adversely on professional reputation, integrity or competence.
  • I(E): keep and improve your skills and do not claim abilities you lack. This part was added in the 2020 edition.
  • In item sets, name the Standard first and then choose the answer.

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 are the five parts of Standard I?

They are I(A) Knowledge of the Law, I(B) Independence and Objectivity, I(C) Misrepresentation, I(D) Misconduct and I(E) Competence. Together they describe professional behaviour toward the law, clients and the public.

How is Standard I tested at CFA Level II?

It appears in item sets with a vignette and four questions. You must find the facts that point to a breach, name the Standard, and choose the right action or conclusion.

Which part of Standard I should I study first?

Begin with Knowledge of the Law, because the rule on following the stricter of law and the Code supports many later cases. Then move on to Independence and Objectivity, which is commonly tested.

Can one case involve more than one Standard?

Yes. Vignettes often combine issues, such as a gift that affects objectivity and also needs disclosure under another Standard. Read for every fact and choose the answer that best fits the question asked.