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 32 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: 311:
According to the AIMR-PPS, plan sponsors, consultants and software vendors
Option A : are exempt from any of the Standards.
Option B : are directly responsible for ensuring the companies they employ are in compliance with the Standards.
Option C : are held accountable to the Standards in the same way as AIM Members, Charterholders and Candidates.
Option D : cannot make a claim of compliance unless these entities actually manage the assets for which they are making the claim of compliance.
Show/Hide Answer
Option D : cannot make a claim of compliance unless these entities actually manage the assets for which they are making the claim of compliance.
Plan sponsors, consultants and software vendors cannot make a claim of compliance unless these entities actually manage the assets for which they are making the claim of compliance. These groups can claim to endorse the Standards and/or require that the investment management firms they employ, from which they solicit information, or to which they sell be in compliance with the Standards.
CFA Level 1 Exam Question No: 312:
Sunil Vaskar is an employee of Glamorgan, a reputable investment banking firm. Glamorgan is a major underwriter for an equity issued by a private firm, Raindrop Waterworks. Sunil has accidentally discovered that the preliminary prospectus issued by Raindrop contains material overstatements about the scope of its businesses and future earning potential. Sunil:.
Option A: must report his findings to his supervisor and consult his legal department.
Option B: must sever all connections with Glamorgan and dissociate himself from its activities.
Option C: need not do anything because the prospectus has been distributed and is, in any case, preliminary.
Option D: must report the case to the SEC since there has been a violation of laws governing equity issues.
Show/Hide Answer
Option C : need not do anything because the prospectus has been distributed and is, in any case, preliminary.
Standard I requires that suspected violation of laws be reported to appropriate supervisory people in the firm. It is also advisable to consult the legal department and dissociate oneself from the illegal activity. Sunil has to dissociate himself from the underwriting process involving Raindrop but he does not have to sever connections with his employer, Glamorgan.
Free CFA Level 1 Mock Exam Question No: 313:
Stewart has been hired by Goodner Industries, Inc., to manage its pension fund. Stewart’s fiduciary duty is owed to
Option A: the management of Goodner.
Option B: the participants and beneficiaries of Goodner’s pension plan.
Option C: the shareholders of Goodner.
Option D: each of these answers equally.
Show/Hide Answer
Option B : the participants and beneficiaries of Goodner’s pension plan.
Under Standard IV (B. 1), Fiduciary Duties, members who manage a company’s pension funds owe a fiduciary duty to the participants and benefits of the plan, not the management of the company or the company shareholders.
CFA Level 1 Free Practice Question No: 314:
When formulating an investment policy for a client, which of the following falls under “investor objectives?”
Option A: proxy voting.
Option B: none of these answers.
Option C: return objectives.
Option D: time horizon.
Option E: liquidity needs.
Option F: investable funds.
Show/Hide Answer
Option C : return objectives.
Return objectives are considered under “investor objectives.” Liquidity needs, time horizon and proxy voting are considered under “investor constraints.”
Free CFA Practice Question No: 315:
Standard II (B) deals with ___________.
Option A: None of these answers.
Option B: Plagiarism.
Option C: Use of Professional Designation.
Option D: Fundamental Responsibilities.
Option E: Professional Misconduct.
Option F: Obligation to Inform Employer of Code and Standards.
Option G: Duty to Employer.
Option H: Disclosure of Conflicts to Employer.
Show/Hide Answer
Option E : Professional Misconduct.
Standard I deals with Fundamental Responsibilities. Standard I (A) deals with Use of Professional Designation. Standard II (B) deals with Professional Misconduct. Standard II (C) deals with Plagiarism. Standard III (A) deals with the Obligation to Inform Employer of Codes and Standards. Standard III (B) deals with the Duty to Employer. Standard III (C) deals with Disclosure of Conflicts to Employer.
CFA Level 1 Sample Question No: 316:
Standard III (B) is known as _________.
Option A: Interactions with Clients and Prospects.
Option B: Preservation of Confidentiality.
Option C: None of these answers.
Option D: Fair Dealing.
Option E: Investment Process.
Option F: Duty to Employer.
Option G: Prohibition against Use of Material Nonpublic Information.
Option H: Professional Misconduct.
Show/Hide Answer
Option F : Duty to Employer.
Standard IV (A) deals with the Investment Process. Standard III (B) deals with Duty to Employer. Standard IV (B.3) deals with Fair Dealing. Standard IV (B) deals with Interactions with Clients and Prospects. Standard V (A) deals with Prohibition against Use of Material Nonpublic Information. Standard IV (B.5) deals with Preservation of Confidentiality. Standard II (B) deals with Professional Misconduct.
Free CFA Level 1 Quiz Question NO: 317:
The allocation of shares in oversubscribed IPOs to investment managers for their personal account is a perk that is most clearly a violation of Standard _________.
Option A: II (B) – Professional Misconduct.
Option B: IV (A.3) – Independence and Objectivity.
Option C: None of these answers.
Option D: IV (B.6) – Prohibition against Misrepresentation.
Option E: IV (B.8) – Disclosure of Referral Fees.
Show/Hide Answer
Option B : IV (A.3) – Independence and Objectivity.
External sources may try to influence the investment process by offering analysts and portfolio managers a variety of perks. Corporations may be seeking expanded research coverage; issuers and underwriters may wish to promote new securities offerings; brokers typically want to increase commission business. The perks may include gifts, invitations to lavish functions, tickets and so on. One type of perk that has gained particular notoriety is the allocation of shares in oversubscribed IPOs to investment managers for their personal accounts. This practice is a violation under
Standard IV (A.3).
Free CFA Level 1 Quiz Question NO: 318:
Tomonaga Olawando is a research analyst currently doing research on Cleebok Shoes, a footwear manufacturer infamous for its exorbitantly priced shoes. Tomonoga has been interviewing Pollyanna Givens, a senior vice president with the public relations division. Pollyanna has told him that the investment community has underestimated the payoffs from Cleebok’s plan to outsource shoe production to Mexico, thus cutting productions costs significantly. She told him her estimate puts thecost savings close to $600 million, as against the figure of $370 million quoted by a few active analysts. In his report, Tomonaga states that the extra savings of $230 million a year will raise the stock price by 26% over the next year and hence, represents a great buy. Tomonaga has
I. not violated any code of ethics.
II. has violated Standard IV (A. 1) – Reasonable Basis & Representations.
II. has violated Standard IV (A.2) – Research Reports.
IV. has violated Standard IV (B.2) – Portfolio Investment Recommendations and Actions.
Option A: III only.
Option B: II and III only.
Option C: II, III and IV only.
Option D: I only.
Show/Hide Answer
Option B : II and III only.
By taking an opinion of a person and representing as a fact in his research report, Tomonaga has violated Standards IV (A. 1) and IV (A.2).
Free CFA Practice Question No: 319:
The AIMR-PPS recommend that both __________ and ___________ risks be presented in conjunction with composite returns.
Option A: absolute; unsystematic.
Option B: total; market.
Option C: external; internal.
Option D: unsystematic; systematic.
Show/Hide Answer
Option B : Total; market.
Total risk relates to the variability of actual (absolute) returns not relative to the market. Market (systematic) risk relates to the volatility of returns relative to the market or some other benchmark.
CFA Mock Exam Free Question No: 320:
Standard III (E) – Responsibilities of Supervisors points out that when violations do occur, _________ procedures may be inadequate.
Option A: compliance.
Option B: none of these answers.
Option C: legal.
Option D: fiduciary duty.
Show/Hide Answer
Option A : compliance.
If a member has adopted reasonable procedures and taken steps to institute an effective compliance program, then the member may not be in violation of Standard III (E). The fact that violations do occur may indicate, however, that the compliance procedures are inadequate. Furthermore, a member may be in violation of Standard III (E) if he or she knows that the procedures designed to detect and prevent violations are not being followed.
