CFA Level I · CFA Level I Exam · Ethics and Trust in the Investment Profession
Which of the following statements best describes the relationship between regulation and investor trust in capital markets?
Compliance with regulation alone is insufficient to fully earn investor trust. Markets are highly regulated, but individuals and firms must also build a culture of integrity that goes beyond strict legal compliance and puts clients' best interests first.
- ACompliance with regulation alone is insufficient to fully earn investor trustCorrect
- BStrict regulation removes the need for a firm-level culture of integrity
- CInvestor trust depends mainly on local customs rather than universal ethics
Explanation
The official text states that global capital markets are highly regulated, yet compliance with regulation alone is insufficient to fully earn investor trust. Firms must also build a culture of integrity. The other options contradict the text: regulation does not remove the need for that culture, and ethics should be universal and not driven by local custom.
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