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 FFree CFA Level 1 Test 22 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: 211:
Which of the following is NOT true about the responsibilities of a member with supervisory duties, as specified by Standard III (E) – Responsibilities of Supervisors?
Option A : Compliance activities must be designed to anticipate the activities most likely to result in misconduct.
Option B : Compliance procedures must meet industry and regulatory standards.
Option C : The supervisor is always accountable for the violations committed by those who report to him.
Option D : If a member cannot discharge supervisory responsibilities due to an absence of compliance system, he or she should decline to accept the duties in writing till such a system is put into effect.
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Option C : The supervisor is always accountable for the violations committed by those who report to him.
Under Standard III (E) – Responsibilities of Supervisors, members must take reasonable care to ensure that their subordinates do not violate any laws or the code of conduct. This includes designing effective procedures to deter fraudulent activity. If such procedures are reasonable, meet industry and regulatory standards, are compatible with the AIM code and are suitable for the firm in question, then the member cannot be held responsible for criminal activity clever enough to bypass the compliance system. Occurrence of such activity does indicate a need for a revamping of the system, though.
CFA Level 1 Exam Question No: 212:
Edwin Hubble, who works for a respectable investment advisory firm, recently found out that his supervisor has been engaging in “front-running,” i.e., executing transactions for personal accounts before client accounts. As an AIMR member, he is required to do all of the following EXCEPT?
Option A: Report the illegal activity to the appropriate regulatory authorities.
Option B: Dissociate himself from the activity.
Option C: Consult with the legal department on the matter.
Option D: Inform senior management about the activity with a view of stopping it.
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Option A : Report the illegal activity to the appropriate regulatory authorities.
Standard I does not require a member to report the illegal activity to the appropriate regulatory authorities, though it may be prudent to do so in many cases if it is evident that the activity is illegal.
Free CFA Level 1 Mock Exam Question No: 213:
If AIMR Members, CFA Charterholders and Candidates do not follow the AIM Performance Presentation Standards and they make material misrepresentations, they will be in violation of what Standard of Professional Conduct?
Option A: Standard V (A).
Option B: None of these answers. The PPS are voluntary, thus failure to follow them will result in no violation of the Standards of Professional Conduct.
Option C: Standard I.
Option D: Standard V (B).
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Option D : Standard V (B).
Although the AIMR-PPS are not explicitly incorporated in the AIMR Standards of Professional Conduct, they should be relied on to help ensure no misrepresentation of performance occurs. Misrepresentation results in violation of Standard V (B)-Performance Presentation.
CFA Level 1 Free Practice Question No: 214:
With regard to international portfolios, if net performance is indicated, managers are required to disclose the assumed _______ for the benchmark.
Option A: hedge.
Option B: disclosure.
Option C: tax rate.
Option D: differentials.
Option E: currency effects.
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Option C : tax rate.
To be in compliance with the AIMR-PPS, the performance presentation for international portfolios must disclose whether composites and benchmarks are presented gross or net of withholding taxes on dividends, interest and capital gains; if net, the assumed tax rate for both the composite and the benchmark.
Free CFA Practice Question No: 215:
Standard I of the Standards of Professional Conduct deals with ______.
Option A: None of these answers.
Option B: Fundamental Responsibilities.
Option C: Fiduciary Duties.
Option D: Priority of Transactions.
Option E: Plagiarism.
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Option B : Fundamental Responsibilities.
Standard I of the Standards of Professional Conduct deals with Fundamental Responsibilities.
CFA Level 1 Sample Question No: 216:
One of the discretionary accounts managed by Farnsworth is the Jones Corporation employee profit- sharing plan. Jones, the company president, recently asked Farnsworth to vote the shares in the profit- sharing plan in favor of the company-nominated slate of directors and against the directors sponsored by a dissident stockholder group. Farnsworth does not want to lose this account because he directs all the account’s trades to a brokerage firm that provides Farnsworth with useful information about tax-free investments. Although this information is not of value in managing the Jones Corporation account, it does help manage several other accounts. The brokerage firm providing this information also offers the lowest commissions for trades are best execution. Farnsworth investigates the directors’ issue, concludes that management’s slate is better for the long-performance of the firm than the dissident group’s slate and votes accordingly.
Farnsworth:
Option A: Did not violate the Standards in voting the share in the manner requested by Jones or in directing the trades to the brokerage firm.
Option B: Violated the Standards in directing the trades to the brokerage firm but not in voting the shares as requested by Jones.
Option C: Violated the Standard in voting the shares in the manner requested by Jones and in directing trades to the brokerage firm.
Option D: Violated the Standards in voting the shares in the manner requested by Jones but not in directing trades to the brokerage firm.
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Option A : Did not violate the Standards in voting the share in the manner requested by Jones or in directing the trades to the brokerage firm.
This question pertains to Standard IV (B.1) Fiduciary Duties, in particular members’ responsibilities for voting proxies and the use of client brokerage. Because Farnsworth investigated the issue and concluded independently the best way to vote, he was not in violation of his fiduciary duties even though the company president asked him to vote the shares of the profit-sharing plan a certain way. Moreover because the brokerage firm provides the, lowest commissions and best executions, he has met his fiduciary duties to the client in using this brokerage firm. Since he’s not paying any extra money of the client for the information he’s receiving from the brokerage firm, it does not matter.
Free CFA Level 1 Quiz Question NO: 217:
Level ______ verification applies to the firm.
Option A: II.
Option B: IV.
Option C: I.
Option D: III.
Option E: 0.
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Option C : III.
Level I verification applies to all firm composites. Level I verification requires a Level I verification at least on the specific composites being verified at Level II.
(Note: There are only two levels of verification.)
Free CFA Level 1 Quiz Question NO: 218:
________ investing is investing with a view toward the social or political statements made by such an investment.
Option A: None of these answers.
Option B: Charitable.
Option C: Political.
Option D: Social
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Option D : Social
Fiduciaries often feel pressure from various constituencies to engage in social investing – investing with a view toward the social or political statements made by such an investment. Members should keep in mind that although such investment may be benign the fiduciary duty of prudence is paramount and dictates that trustees judge investments according to the criteria of risk and return, asset diversification and cost- conscious investing.
Free CFA Practice Question No: 219:
Under Standard IV (B.6), Prohibition against Misrepresentation, a member may discuss a “guaranteed” investment, as long as that investment is which of the following?
Option A: domestic stocks.
Option B: foreign stocks.
Option C: medium-term notes.
Option D: long-term bonds.
Option E: none of these answers.
Option F: short-term Treasury securities.
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Option F : short-term Treasury securities.
Standard IV (B.6) prohibits statements that an investment is “guaranteed”, or that superior returns can be expected in the future based on the member repeating past success. It does not preclude truthful statements on investments with guaranteed returns, such as some insurance contracts, short-term Treasury securities and insured bank deposits.
CFA Mock Exam Free Question No: 220:
According to the AIM-PPS, performance must be calculated
Option A: before or after the deduction of trading expenses, as long as that information is disclosed.
Option B: before or after the deduction of trading expenses, without the need for disclosures because there will be no difference in the numbers.
Option C: before the deduction of trading expenses.
Option D: after the deduction of trading expenses.
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Option D : after the deduction of trading expenses.
Performance must be calculated after the deduction of trading expenses (e.g., broker commissions and SEC fees), if any. This is a requirement for calculation of returns.
