Answer-first summary for fast verification
Answer: Fields violated the GARP Code of Conduct when she misrepresented the bonds by not explaining their inherent risks.
**Explanation:** Fields violated the GARP Code of Conduct by misrepresenting the bonds and failing to disclose their inherent risks. Under the GARP Code of Conduct, professionals must: - **Act with integrity and avoid misleading statements** - **Provide fair and balanced representations** of investment characteristics - **Disclose material risks** to clients Limited obligation bonds backed only by project revenues (especially a golf course, which can be volatile) carry higher risk than general obligation municipal bonds. By characterizing them as "safe and secure" without explaining the revenue dependency and project-specific risks, Fields misrepresented the investment's true risk profile. This violates the ethical obligation to provide accurate and complete information to clients.
Author: LeetQuiz Editorial Team
Ultimate access to all questions.
Harriet Fields, an investment adviser specializing in selling municipal bonds, advertises on television explaining their safety and security. The bonds she is currently selling are limited obligation bonds backed only by the revenue generated from the projects they fund, which include a housing project and a golf course. Fields tells her prospective clients that the bonds are safe, secure, and offer generous interest payments. Which of the following statements is most correct regarding Fields's actions?
A
Fields did not violate the GARP Code of Conduct because municipal bonds are generally regarded as being safe investments.
B
Fields violated the part of the GARP Code of Conduct dealing with confidentiality.
C
Fields violated the GARP Code of Conduct when she misrepresented the bonds by not explaining their inherent risks.
D
Fields has not violated any of the ethical responsibilities related to the GARP Code of Conduct.
No comments yet.