Microsoft AZ-140 Q&A - in .pdf

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NEW QUESTION: 1
An investment management firm has been hired by ETV Corporation to work on an initial public offering for the company. The firm's brokerage unit now has a sell recommendation on ETV, but the head of the investment banking department has asked the head of the brokerage unit to change the recommendation from sell to buy. According to the Standards, the head of the brokerage unit would be permitted to:
A. Increase the recommendation by no more than one increment (in this case, to a hold recommendation).
B. Assign a new analyst to decide if the stock deserves a higher rating.
C. Place the company on a restricted list and give only factual information about the firm.
D. Reassign responsibility for rating the stock to the head of the investment banking unit.
Answer: C
Explanation:
Explanation/Reference:
Explanation:
This question relates to Standard IV (A.3), Independence and Objectivity. When asked to change a recommendation on a company stock to gain business for the firm, the head of the brokerage unit must refuse in order to maintain his independence and objectivity in making the recommendation. To avoid the appearance of a conflict of interest, the firm should discontinue issuing recommendations about the company. Changing the recommendation in any manner is a violation of the member's duty to maintain independence and objectivity. Assigning a new analyst would not address the conflict of interest.
Reassigning responsibility for the stock to the head of investment banking would actually exacerbate the conflict.

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