Hi CFA Aspirants, welcome to AKVTutorials. Are you preparing for CFA Level 1, 2, 3 exams for making a career in CFA (Charted Financial Analyst). According to CFA Wikipedia, CFA The Chartered Financial Analyst (CFA) program is a postgraduate professional certification offered internationally by the American-based CFA Institute. A candidate who successfully completes the program and meets other professional requirements is awarded the “CFA charter” and becomes a “CFA charter holder”. Therefore, you need CFA Study Notes and Free CFA Level 1 Practice Test 11 Questions CFA Mock Exam Answer Keys AMBIPi.
In this article, you will get Free CFA Level 1 Mock Exam Practice Questions.
Free CFA Level 1 Mock Practice Exam Questions Bank
Free CFA Level 1 Practice Question No: 101:
Standard V (A), Prohibition against Use of Material Nonpublic Information applies to
Option A : all members of the investment community.
Option B : recipients of information who are not directly or indirectly associated with the firm the material nonpublic information is about.
Option C : recipients of information who are directly or indirectly associated with the firm the material nonpublic information is about.
Option D : none of these answers.
Show/Hide Answer
Option B : recipients of information who are not directly or indirectly associated with the firm the material nonpublic information is about.
Standard V (A), Prohibition against Use of Material Nonpublic Information applies to recipients of information who are not directly or indirectly associated with the firm the material nonpublic information is about. Such persons include research analysts, portfolio managers, venture capitalists, pension sponsors, investor relations executives, rating agencies, trust officers and others who make or recommend investment decisions.
CFA Level 1 Exam Question No: 102:
Which of the following disclosures must a firm make in order to be in compliance with AIMR-PPS?
I. The effective date of firm compliance.
II. A measure of the dispersion of individual component portfolio returns around the aggregate composite return.
III. The existence of a minimum asset size below which portfolios are excluded from the composite.
Option A: I, II and III.
Option B: I and III only.
Option C: I only.
Option D: I and II only.
Show/Hide Answer
Option A : I, II and III.
All of these are mandatory disclosures under AIMR-PPS.
Free CFA Level 1 Mock Exam Question No: 103:
The ultimate responsibility to ensure complianc1e with code rests with:
Option A: every member of the firm.
Option B: the CEO of the firm.
Option C: all of these answers.
Option D: the highest ranking AIM member of the firm.
Show/Hide Answer
Option D : the highest ranking AIM member of the firm.
While every member must always comply with the Code, Standard III (A) stipulates that ensuring compliance with the Code in an organization ultimately is the responsibility of the senior most AIMR member of the firm reporting to a non-member. He must make sure that the firm environment is sympathetic to compliance with the Code.
CFA Level 1 Free Practice Question No: 104:
Arbliss, an AIM member, has been working for a financial software company, Supersoft Corp. for the past 3 years. He now wants to leave the firm and start his software proprietorship. Which of the following will not constitute a violation of the AIMR code?
1. Making arrangements to set up the proprietorship prior to leaving current employment, without Supersoft knowing about it.
II. Soliciting Supersoft’s clients prior to the termination of employment.
III. Using a confidential software error-checking program he had developed for Supersoft for his own purposes.
Option A: I only.
Option B: III only.
Option C: II and III only.
Option D:I and III only.
Show/Hide Answer
Option A : I only.
Standard III (B) – Duty to Employer – does not preclude a member from entering into independent practice while still employed. It does require the employee to obtain written permission from the employer as well as the outside entity before doing this. It does not prohibit a departing employee from making arrangements 1 enter independent practice prior to leaving current employment, as long as such preparations do not constitute a breach of loyalty toward the employer. Activities that can be a breach of loyalty include misappropriation of trade secrets, misuse c confidential information, solicitation of the firm’s clients before the termination of unemployment and in general, any activity that would destabilize the firm’s operations.
Free CFA Practice Question No: 105:
Relationships with and Responsibilities to the Investing Public are dealt with under:
Option A: Standard V.
Option B: None of these answers.
Option C: Standard III.
Option D: Standard II.
Option E: Standard IV
Option F: Standard I.
Show/Hide Answer
Option A : Standard V.
Relationships with and Responsibilities to the Investing Public are dealt with under Standard V.
CFA Level 1 Sample Question No: 106:
The ______ states that broker/dealers should be subject to strict standards because they are advertising themselves as market professionals.
Option A: cover canon.
Option B: canopy principle.
Option C: posting criterion.
Option D: shingle theory.
Option E: marketing regulation.
Show/Hide Answer
Option D : shingle theory.
The shingle theory states that broker/dealers should be subject to strict standards because they are “hanging out their shingles,” or, advertising themselves as market professionals. The theory states that inherent in the relationship between brokers/dealers and their clients is the representation that the customer will be dealt with fairly. Brokers/dealers are in a position to exploit their customers* trust and ignorance and therefore they are held to a higher duty of care.
Free CFA Level 1 Quiz Question NO: 107:
According to the AIMR PPS, composites must include new portfolios at the start of the next performance measurement period,_____, after the portfolio comes under management or according to reasonable and consistently applied firm guidelines.
Option A: at least annually.
Option B: at least semi-annually.
Option C: at least quarterly.
Option D: at least monthly.
Show/Hide Answer
Option C : at least quarterly.
Composites must include new portfolios at the start of the next performance measurement period (at least quarterly) after the portfolio comes under management or according to reasonable and consistently applied firm guidelines. This is a requirement of creation and maintenance of composites.
Free CFA Level 1 Quiz Question NO: 108:
Procedures for compliance with Standard I include ________.
Option A: activities relating to interns and people under contract.
Option B: keep informed.
Option C: when you suspect illegal activity, determine legality.
Option D: when you suspect illegal activity, dissociate from that activity.
Option E: all of these answers.
Option F: maintain current files.
Option G: review procedures.
Show/Hide Answer
Option E : all of these answers.
Members should maintain current reference copies of applicable statutes, rules and regulations in a readily accessible manner. Members should establish a procedure by which employees are kept informed about changes in applicable laws. Members should review procedures on a regular basis to ensure that they reflect current law and provide adequate guidance. When a member suspects illegal activity is being conducted, the member should consult counsel to determine the conduct’s legality and dissociate from the conduct if there are reasonable grounds to believe that it is illegal. This applies to the activities of interns or contractors as well.
Free CFA Practice Question No: 109:
What is the effective date for compliance with the AIMR
-Performance Presentation Standards for including accrued income in market value performance calculations?
Option A: January 1, 1997.
Option B: January 1, 1993.
Option C: July 1, 1995.
Option D: January 1, 1992.
Show/Hide Answer
Option A : January 1, 1997.
From January 1, 1997, going forward, all of the firm’s composites and performance presentations must include accrued income in market value performance calculations. In addition, all of the firm’s performance presentations, including presentations of historical performance, must contain a measure of composite dispersion.
CFA Mock Exam Free Question No: 110:
Wolfram Hitchwalker is a money manager with Armadillo Investments. He currently manages a few retirement accounts, clients who have a steady current income need and are averse to capital loss. Wolfram recently read a research report which concluded that the stock of HighFly, Inc. was a great buy because of a pending expansion plan into Southeast Asia which would double the profits of Highly from foreign operations. Wolfram decided that the analysis was sound and that his clients could gain significantly if he bought the HighFly stock now and sold it once the price run-up occurred.
Accordingly, he sold some of the fixed income securities in his client accounts and bought shares of HighFly. After two weeks, he sold the shares at a substantial profit and reinvested the funds back in fixed income securities. Wolfram has
I. not violated any code of ethics since the investment was wise and made his clients better off.
II. has violated Standard IV (A.1) – Reasonable Basis & Representations.
III. has violated Standard IV (B.1) – Fiduciary Duties
IV. has violated Standard IV (B.2) – Portfolio Investment Recommendations and Actions.
Option A: II and IV only.
Option B: III and IV only.
Option C: I only.
Option D: II only.
Option E: IV only.
Option F: III only.
Show/Hide Answer
Option A : II and IV only.
Even though the transaction turned out to be profitable for the clients ex post, the decision to invest in the stock was unwise ex ante. Wolfram should have recognized that his clients do not have the risk appetite for speculative securities, given their need for current income and preservation of the principal. Clearly, speculation in stocks is not an appropriate investment for these clients.
