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 4 Questions Bank 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: 31:
Chan and Chung are two of the five Managing Directors of Alfalfa, a mid-size hedge fund. In a recent court case involving a securities lawsuit, Chan was called on to testify as an expert on securities research. During his testimony, Chan had to invoke several results from a proprietary research carried out by his staff at Alfalfa. He did so without specifically attributing the results to them. At around the same time, Chung had to meet with a few prospective clients for a business presentation. During this presentation, he showed them some of the results obtained by Chan’s team, without specifically acknowledging the research team. Instead, he referred to them with phrases like, “our studies indicate that…” In this set of events, as it relates to Standard I(C) – Prohibition against Plagiarism,
Option A : neither Chan nor Chung has violated the standard.
Option B : Chan has not violated the standard while Chung has
Option C : both Chan and Chung have violated the standard
Option D : Chan has violated the standard while Chung has not
Show/Hide Answer
Option D : Chan has violated the standard while Chung has not
In the interaction with the clients, senior management members represents the firm and as such, do not have to give specific attribution to research obtained by employees of the firm. Hence, Chung has committed no violation. On the other hand, in the capacity of an expert, Chan is not representing the firm but himself. in such a case, he has to properly acknowledge the source of all results he quotes.
CFA Level 1 Exam Question No: 32:
Brikland Strickowski learned a month ago that one of his clients, Stratmann, had been regularly using inside information provided by numerous “contacts” in various firms to generate his trading activity with Brikland. Brikland was surprised at Stratmann’s recklessness but did not want to get him into trouble so he did not inform anyone about this. AIM has been tipped about Stratmann’s activity and one of the investigators from AIR’s Professional Conduct Program (PCP) recently got in touch with Brikland about this. Brikland, in his desire not to have his CFA designation voided by AIM, decided to divulge everything he knew about Stratmann’s investment activity, though this information is considered confidential even by AIMR. Which of the following is/are true about this sordid mess?
1. Brikland violated Standard IV (B.5) – Preservation of Confidentiality -by revealing confidential information about Strattman to the PCP investigator.
II. Strattman violated Standard V (A) – Prohibition Against Use of Non-Public Information.
III. Brikland violated Standard I – Fundamental Responsibilities – by not informing his supervisor and/or the SEC about the insider trading.
IV. Brikland violated Standard I – Fundamental Responsibilities – by not dissociating himself from Strattman’s portfolio.
Option A: I, II, III and IV
Option B: II only.
Option C: II and IV
Option D: I, II and IV only.
Show/Hide Answer
Option C : II and IV
As an AIMR member, Brikland must cooperate fully with any investigation carried out by the PCP. Since the information revealed during the investigation is kept in strict confidentiality, such a cooperation is not considered a violation of Standard IV (B.5) – Preservation of Confidentiality. Indeed, the Code of Ethics expressly requires members to cooperate with such investigations, failing which the member can be summarily suspended. Note that the Code does not require members to report criminal activity to proper authorities, though doing so is most often prudent and a suggested course of action (Standard I – Fundamental Responsibilities). However, if the member knowingly participates in illegal activities or does not dissociate himself from such activities, he would be violating the code.
Free CFA Level 1 Mock Exam Question No: 33:
Xuanchi Zuan is a successful portfolio manager with Up & Away, a money management fund that operates strongly bullish funds. One of Zuan’s clients, Margo Margolis, is about to retire in a couple of years. Margo has been phasing out her risky investments over the past five years, moving them into longterm treasury bonds. However, she recently read in a financial magazine the attractiveness of investing in emerging markets. She was especially enticed by the 30% and 40% annual returns observed in these markets over the past 2-3 years. She approaches Zuan and instructs him to move 30% of her funds into these markets. Zuan should:
Option A: none of these answers.
Option B: evaluate the emerging market investments and move the funds only if he considers them suitable for investment for Margo.
Option C: refuse to do so, pointing out the high risks involved in such investments.
Option D: move the funds into emerging market securities per Margo’s request.
Show/Hide Answer
Option A : none of these answers.
Zuan cannot refuse to do something that his client instructs him to do, as long as it is legal. However, it is his duty to apprise his clients of the risks and returns associated with different instruments and advise them about the suitability of including such investments in their portfolios. Once the client is aware of all the pitfalls and rewards, the final decision must rest with the client. In Margo’s case, Zuan should do the same before acting on her instructions. This question relates most directly to Standard IV B. 1) – Fiduciary Duties.
CFA Level 1 Free Practice Question No: 34:
If every one of your research reports had a statement stating that every research report on issues by a corporate client reflects the unbiased opinion of the analyst, you would be complying with Standard
Option A: IV (A.3)
Option B: IV (A. 1).
Option C: IV (A.2).
Option D: II (A).
Option E: II (C).
Option F: II (B).
Show/Hide Answer
Option A : IV (A.3)
To avoid violations of Standard IV (A.3), one of the procedures members should comply with is the need to protect the integrity of opinions. Members and their firms should establish policies stating that every research report on issues by a corporate client reflects the unbiased opinion of the analyst. In this way, firms ensure that the independence and objectivity of their member analysts is maintained.
Free CFA Practice Question No: 35:
Which of the following rules apply for calculations under the Performance Presentation Standards?
Option A: Accrual accounting must be used for fixed-income securities
Option B: All of these answers.
Option C: Total return, including realized and unrealized gains and losses, must be used.
Option D: Time-weighted rate of return must be used.
Show/Hide Answer
Option C : Total return, including realized and unrealized gains and losses, must be used.
All of these answers are general rules applying to calculation of returns under the PPS.
CFA Level 1 Sample Question No: 36:
According to the AIMR-PPS when presenting the performance record of composites containing portfolios that use leverage, which of the following statements are true?
Option A: If the use of leverage is discretionary, the performance presented must include the effects of the leverage.
Option B: If the use of leverage is discretionary, performance on a restated, all-cash basis must be provided.
Option C: All of these statements are true.
Option D: If the use of leverage is nondiscretionary, performance must be presented on an all-cash basis
Show/Hide Answer
Option C : All of these statements are true.
For composites containing portfolios that use leverage, all of the statements are true. This is a requirement for presentation of results.
Free CFA Level 1 Quiz Question NO: 37:
Which of the following AIMR standards states that a member shall not knowingly participate, or assist, in any violation of applicable laws, regulations, or the Code and Standards?
Option A: III.
Option B: VI.
Option C: V.
Option D: I.
Show/Hide Answer
Option D : I.
Standard I: Fundamental Responsibilities states: “Members shall: A. Maintain knowledge of and comply with all applicable laws, rules and regulations of any government, governmental agency, regulatory organization, licensing agency, or professional association governing the members’ professional activities, and B. Not knowingly participate or assist in any violation of such laws, rules, or regulations.
Free CFA Level 1 Quiz Question NO: 38:
Which of the following is/are true about the definition of “total firm assets” where PPS are concerned?
I. Total assets include non-discretionary as well as discretionary assets.
II. Unless the firm actually manages the assets underlying investment strategies, they are not included in the definition of total assets.
III. Assets assigned to subadvisors which are not directly under the firm’s management should not be included as part of “total assets.”
Option A: I, II and III.
Option B: I and III only.
Option C: II and III only.
Option D: I and II only.
Show/Hide Answer
Option A : I, II and III.
I, II and III.
Free CFA Practice Question No: 39:
Which of the following can be found in Standard 1?
Option A: Members shall maintain knowledge of and comply with all applicable laws.
Option B: Members shall not undertake any independent practice in competition with employer without written consent.
Option C: Members shall maintain appropriate records to support the reasonableness of recommendations.
Option D: Members shall not participate in plagiarism.
Option E: Members shall make reasonable efforts to achieve public dissemination of material nonpublic information disclosed in breach of a duty.
Show/Hide Answer
Option A : Members shall maintain knowledge of and comply with all applicable laws.
Standard I states that members shall: “A. Maintain knowledge of and comply with all applicable laws of any governing agency or professional association governing the member’s professional activities, and B. Not knowingly participate or assist in any Violation of laws, rules or regulations.”
CFA Mock Exam Free Question No: 40:
To claim compliance with the AIM Performance Presentation Standards,
Option A: at least 1/2 of the investment managers in the firm must comply with the Standards.
Option B: the entire firm must comply with the Standards.
Option C: none of these answers. The Standards apply to individual investment manager’s performance only.
Option D: at least 3/4 of the investment managers in the firm must comply with the Standards.
Show/Hide Answer
Option B : the entire firm must comply with the Standards.
To claim compliance with the AIMR-PPS, the firm must comply with the Standards on a firmwide basis. Additionally, the firm must state exactly how it is defining itself for purposes of compliance
