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 Test 12 Practice Sample Questions 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: 111:
According to Standard V (B), firms can claim compliance with the PPS only if their presentation is _______ in compliance with the Performance Presentation Standards in all material respects
Option A : none of these answers.
Option B : retroactively.
Option C : fully.
Option D : at least 50 percent.
Option E : partially.
Show/Hide Answer
Option C : fully.
If members or firms want to claim compliance with PPS, their presentation must be fully in compliance with the PPS in all material respects. To claim compliance with the PPS without meeting the mandatory requirements of the PPS is a violation of Standard V (B).
CFA Level 1 Exam Question No: 112:
______ provide a relative measure for the riskiness of a strategy.
Option A: Volatility measures.
Option B: Benchmarks.
Option C: Indexes.
Option D: Investor universes.
Option E: Disclosures.
Show/Hide Answer
Option B : Benchmarks.
Benchmarks, including market indexes, manager universes and normal portfolios, provide a relative measure for the riskiness of a strategy.
Free CFA Level 1 Mock Exam Question No: 113:
Shortin Mart is a quantitative research analyst with Dataminers, an investment advisory firm which prides itself on finding patterns in past market data. Shortin recently used data on high-yield, distressed firm corporate convertible bonds and discovered that over the last 3 years, this class has generated an astounding 76% rate of return (assuming optimal conversion). Realizing that this result is mainly due to a strong bull market, he recommends to his portfolio managers that if they believe the market will be bullish over the next year, they should add extreme junk bonds to their portfolios. Shortin has
I. not violated any code of ethics.
II. has violated Standard IV (A. 1) – Reasonable Basis & Representations.
III. has violated Standard IV (A.2) – Research Reports.
IV. has violated Standard IV (B.2) – Portfolio Investment Recommendations and Actions.
Option A: III and IV only
Option B: II and III only
Option C: I only.
Option D: II only.
Show/Hide Answer
Option D : II only.
In the present case, Shortin was negligent in that he did not carry out through analysis of his result. For one, he should have used a much longer period to determine a pattern. Second, he should have been careful in laying out all the caveats to his result and even questioned the validity of the result. By not following such a course. he violated Standard IV (A. 1) – Reasonable Basis & Representations. Note that he has not violated Standard IV (A.2) –
Research Reports.
CFA Level 1 Free Practice Question No: 114:
The primary determinant of a fiduciary’s powers and duties are to be found in the ______.
Option A: board of director’s meeting minutes.
Option B: governing documents (trust documents & investment management agreements).
Option C: FDIC General Rules.
Option D: ERISA Statement of Procedures.
Option E: none of these answers.
Option F: ERISA Funding Guidelines.
Show/Hide Answer
Option B : governing documents (trust documents & investment management agreements).
Fiduciaries must manage any pool of assets in their control in accordance with the terms of the governing documents (such as trust documents and investment management agreements), which are the primary determinant of a fiduciary’s powers and duties.
Whenever their actions are contrary to provisions of those instruments or applicable law, fiduciaries are exposed to liability through litigation brought by parties at interest.
Free CFA Practice Question No: 115:
Which of the following is not a violation of Standard II (C)?
Option A: Using a chart that was prepared by another analyst in a presentation, without acknowledgment.
Option B: All of these answers are violations.
Option C: Giving an oral report and citing specific quotations, attributable to “leading analysts,” without specific reference.
Option D: Use of statistical information provided by Standard & Poor’s, without acknowledgment.
Option E: Use of a small part of an analyst’s work who is employed in a completely different (non-competitive) industry, without acknowledgment.
Show/Hide Answer
Option D : Use of statistical information provided by Standard & Poor’s, without acknowledgment.
Using excerpts from articles or reports prepared by others, either verbatim, or with only a slight change, without acknowledgment; citing specific quotations, attributable to “leading analysts,” without specific reference; using charts or graphs without stating their sources; and copying proprietary computerized spreadsheets or algorithms without seeking the authorization of their creators – all of these practices are violations of Standard II (C). Only globally recognized sources of factual material such as that provided by Standard & Poor’s, or Moody’s Investors Service, can be used without acknowledgment, since such information is already in the public realm.
CFA Level 1 Sample Question No: 116:
Christine Crumbwell and Dorothy Drummond are two portfolio managers with Neptune Funds. Cristine is managing the personal trust fund of Paul Roker, who created the fund as an income support for his wife and a legacy for his two sons after his wife’s death. Dorothy is in charge of a fund created by Katey Koric. Katey had started this fund as a long-term investment but recently decided to shift the asset mix toward municipal and high-income bonds. Her friend pointed out a great investment opportunity in the newly issued, high-yield-high-income Orange County bonds and Katey instructed Dorothy to sell off a large chunk of the stock holdings in the fund and reinvest in the Orange County bonds. Dorothy spoke to Christine about this and they both agreed that the bonds were an excellent buy.
Dorothy carried out Katey’s instructions and Christine decided that Paul’s portfolio would be better off if she sold some of the small cap stocks and bought the bonds and followed Dorothy’s suit.
I. Dorothy has violated Standard IV (B. 1) – Fiduciary Duties by not discussing the issues further with Katey.
II. Christine has violated Standard IV (B. 1) – Fiduciary Duties by tilting the portfolio mix toward high-income instruments.
III. Katey has violated Standard V (A) – Prohibition Against Use Of Non-Public Information.
Option A: I, II and III.
Option B: I and II only.
Option C: I only.
Option D: II only.
Show/Hide Answer
Option D : II only.
Christine, as a manager of a personal trust, has to balance the interests of the income beneficiaries and the remaindermen who need capital appreciation. By tilting the asset mix toward high-income bonds, Christine has violated her fiduciary duties toward Paul Roker’s sons by effectively transferring some of their wealth to their mother. On the other hand, Dorothy has violated no such duty since she in charge of an advisory account. The account belongs to Katey alone and she is free to instruct Dorothy to change investments as she pleases. Finally, the Orange County bonds have already been issued and there is no misuse of any inside information so Katey cannot be accused of insider trading. Standard IV (B.1) – Fiduciary Duties.
Free CFA Level 1 Quiz Question NO: 117:
Which of the following relating to procedures for complying with Standard III (E) is false? The compliance procedures should
Option A: outline permissible conduct.
Option B: delineate procedures for reporting violations and sanctions.
Option C: be easy to understand.
Option D: outline the scope of the procedures.
Option E: designate a compliance officer.
Option F: none of these answers.
Show/Hide Answer
Option F : none of these answers.
All the statements are true. Adequate compliance procedures should be drafted so that they are easy to understand. They should designate a compliance officer and clearly define the officer’s authority and responsibility; outline the scope of the procedures; outline permissible conduct and delineate procedures for reporting violations and sanctions.
Free CFA Level 1 Quiz Question NO: 118:
By blindly adopting the ideas and works of others without acknowledgment, you have definitely violated Standard ______. You also may have violated Standard _______ because you may be making recommendations without a reasonable basis.
Option A: II (A); IV (A. 1).
Option B: II (A); IV (B. 1).
Option C: II (A); IV (A.2).
Option D: II(C): IV (B.2).
Option E: II(C): IV (A.2).
Option F: II(C): IV (B. 1).
Option G: II(C): IV (A. 1).
Option H: II (A); IV (B.2).
Show/Hide Answer
Option G : II(C): IV (A. 1).
This is explicitly stated under Standard II (C) – Prohibition against Plagiarism.
Free CFA Practice Question No: 119:
In reference to AIMR-PPS, which of the following is/are true?
I. If the valuation of an investment asset is not based on current market value, it should not be included in total assets to which PPS are being applied.
II. Composites cannot not be presented as being in compliance unless all the firm’s qualifying portfolios are accounted for in at least one composite defined according to similar strategy or investment objective.
III. A subsidiary may claim to be in compliance with the PPS even if the parent firm is not.
Option A: I, II and III.
Option B: I and III only.
Option C: II and III only.
Option D: II only.
Show/Hide Answer
Option A : I, II and III.
Assets to which AIMR-PPS cannot be applied are not to be considered while considering compliance. For example, investment instruments like the GIC whose valuation is not based on market conditions, must be excluded.
CFA Mock Exam Free Question No: 120:
Standard III (A) states that members notify their _______ of the code and Standards. This notification must be done ________.
Option A: nearest Society secretary; within 45 days of candidacy.
Option B: immediate supervisor; in writing.
Option C: nearest Society secretary; orally or in writing.
Option D: chief operating officer (or equivalent); in writing.
Option E: chief operating officer (or equivalent); orally or in writing.
Option F: immediate supervisor; orally or in writing.
Option G: immediate supervisor; within 45 days of candidacy.
Option H: any of these answers is acceptable; as long as the notification is made.
Show/Hide Answer
Option B : immediate supervisor; in writing.
Standard III (A): Relationship with and Responsibilities to the Employer, states that: “Members shall inform their employer, in writing, through their direct supervisor, that they are obligated to comply with the Codes and Standards and are subject to disciplinary sanctions for violations thereof.”
