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CFA Level I · CFA Level I Exam · Ethics and Trust in the Investment Profession

Which statement about the relationship between regulation and a culture of integrity is most accurate?

Compliance with regulation alone is insufficient to fully earn investor trust. Individuals and firms must build a culture of integrity that promotes stewardship of investor assets and acting in clients' best interests above and beyond strict legal compliance, while regulation still plays a vital role.

  1. AStrict compliance with local law is sufficient to earn investor trust.
  2. BRegulation is unnecessary where firms have a strong ethical culture.
  3. CCompliance with regulation alone is insufficient to fully earn investor trust, so firms must go beyond strict legal compliance.Correct

Explanation

The text says markets are highly regulated but compliance alone is insufficient. Individuals and firms must develop a culture of integrity, promoting stewardship and client interests above and beyond strict compliance with the law. The first option ignores this and the second overstates it.

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