QUESTIONS 1 THROUGH 18 RELATE TO ETHICAL AND PROFESSIONAL STANDARDS.

18. Meshack Bradovic, CFA, was recently hired as a credit analyst at a credit rating agency whose

major clients include publicly listed companies on the local stock exchange. One of the clients is

currently preparing to issue a new bond to finance a major factory project. Analysts are

speculating that without the new factory the company will not survive the onslaught of

competition from increasing imports; therefore, the company is counting on an upgraded credit

rating to enhance the subscription level of the issue. Bradovic’s research suggests the

creditworthiness of the company has severely deteriorated over the last year due to negative

operating cash flows. Without conducting extensive research, Bradovic’s boss puts pressure on

him to upgrade the credit rating to an investment grade rating. What course of action is most

appropriate for Bradovic to prevent any violation of the CFA Code or Standards?

A. Quit his position with the firm.

B. Upgrade the rating but note his objections in writing.

C. Disassociate with the credit rating report, the bond issue and the client.

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