Chartered Financial Analyst (CFA) Practice Exam Level 2

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Prepare for the CFA Exam Level 2 with flashcards and multiple-choice questions. Each question includes hints and explanations to boost your confidence and enhance your study process. Get ready for success!

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Which of the following indicates a lack of independence?

Working solely as an employee without connections
Former employment with the company
Mutual agreements without any prior involvement
Long-term knowledge of industry trends

The correct answer is: Former employment with the company

The correct choice highlights that former employment with the company can present a conflict of interest, which indicates a lack of independence. When an individual has previously worked for a company, they may possess biases that stem from their previous role, such as loyalty or favorable treatment toward that organization. This past relationship can compromise objectivity when making decisions or assessments related to the company. The other options do not suggest a lack of independence in the same way. Working solely as an employee without connections typically indicates a neutral position. Mutual agreements without prior involvement suggest that there are no previous connections that might compromise objectivity. Additionally, long-term knowledge of industry trends does not inherently detract from independence, as one may gather such information impartially over time without personal interests affecting their judgment. Thus, the former employment scenario stands out as a clear indicator of potential influence and bias.