CFA Level I · CFA Level I Exam · Ethics and Trust in the Investment Profession
Which of the following is the most likely consequence of declining trust in investment professionals and firms?
Reduced investment capital is the most likely consequence. When trust falls, investors invest less, which can reduce innovation and job creation and harm the economy and society, and may leave the investment industry less vibrant or smaller.
- AGreater liquidity and lower transaction costs in capital markets
- BReduced investment capital, which can lower innovation and job creationCorrect
- CA larger and more vibrant investment industry
Explanation
The text says decreased investment capital can reduce innovation and job creation and hurt the economy and society. Reduced trust can also leave the investment industry less vibrant, if not smaller. Better liquidity or a larger industry are opposite outcomes.
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