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 Practice Test 8 Questions Level 1 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: 71:
Which of the following is/are required by AIMR-PPS with regards to calculation of returns?
I. For leveraged portfolios, the stated returns must be on an “all-cash” basis, removing the effects of debt financing.
II. Performance must be based on “gross” returns i.e. before necessary expenses like brokerage and SEC fees.
III. Composites must be asset-weighted using beginning-of-period weights.
Option A : none of them.
Option B : I, II and III.
Option C : I and III only.
Option D : III only.
Show/Hide Answer
Option D : III only.
For leveraged portfolios, PPS require a statement of performance using actual returns as well as on an “all-cash” basis (i.e. without leverage). Performance must be based on returns after trading expenses like brokerage and SEC fees. Composites must be asset-weighted using beginning-of-period weights.
CFA Level 1 Exam Question No: 72:
Level _______ verification applies to the firm.
Option A: IV.
Option B: 0.
Option C: I.
Option D: II.
Option E: III.
Show/Hide Answer
Option C : I
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 Mock Exam Question No: 73:
When an investment manager uses client brokerage to purchase research services that benefit the investment manager; this is known as _________.
Option A: under-the-table agreements.
Option B: soft dollars.
Option C: through-research agreements.
Option D: bartering arrangements.
Option E: shifting agreements.
Show/Hide Answer
Option B : soft dollars.
An investment manager often has discretion over the selection of brokers executing transactions. Conflicts arise when an investment manager uses client brokerage to purchase research services that benefit the investment manager, which is commonly called “soft dollars,” “soft pounds,” or “soft commissions.” Whenever a manager uses such client brokerage to purchase services that benefit him, as a fiduciary, he must disclose to clients the methods or policies followed to address the potential conflict.
CFA Level 1 Free Practice Question No: 74:
ERISA fiduciaries must adhere to the following prudent procedures:
– establish a ______ investment policy for the plan
– diversify plan assets
– make investment decisions with the skill and care of a prudent expert
– monitor investment performance
– control investment expenses
– avoid prohibited transactions
Option A: supervisory.
Option B: none of these answers.
Option C: written.
Option D: diversified.
Show/Hide Answer
Option C : written.
These procedures are stipulated under the detailing of ERISA fiduciary duties, to ensure that the fiduciary complies with the duty to act with prudence.
Free CFA Practice Question No: 75:
A critical part of Standard IV (A.2) is to distinguish between:
Option A: buy side and sell side
Option B: Industry and company analysis.
Option C: insider trading and appropriate trading.
Option D: research reports and investment memoranda.
Option E: employees and independent contractors.
Option F: CFA charter holders and non CFA charter holders.
Option G: none of these answers.
Show/Hide Answer
Option G : none of these answers.
Standard IV (A.2) – Research Reports states the responsibility of AIMR members, CFA charter-holders and candidates to include in each research report those key facts that are instrumental to the investment recommendation presented in the report. A critical part of this requirement is to distinguish clearly between opinions and facts.
CFA Level 1 Sample Question No: 76:
Members _______ to be in compliance with the Performance Presentation Standards to be in compliance with Standard V (B).
Option A: are not required
Option B: may be required.
Option C: are always required.
Option D: none of these answers.
Option E: will be required, as of 1/1/2001,.
Option F: will be required, as of 1/1/2002,.
Show/Hide Answer
Option A : are not required
The PPS are voluntary standards that a member or a firm may adopt in compiling and presenting performance figures. AIMR adopted and promotes the PPS as a method of obtaining industry wide uniformity in performance presentation information so that results are directly comparable among investment managers.
Members are not required to be in compliance with the PPS to be in compliance with Standard V (B).
Free CFA Level 1 Quiz Question NO: 77:
Which Standard deals with personal integrity and prohibits individual behavior that reflects badly on the investment industry?
Option A: III (C).
Option B: I (D).
Option C: II (B).
Option D: III.
Option E: None of these answers.
Option F: IV (A).
Show/Hide Answer
Option B : I (D).
Standard II (B) deals with personal integrity and prohibits individual behavior that reflects adversely on the entire profession
Free CFA Level 1 Quiz Question NO: 78:
The Prudent Man Rule, as it was originally written, was clearly oriented towards _________.
Option A: charitable organizations.
Option B: public pension plans.
Option C: individual clients.
Option D: personal trust accounts.
Option E: endowments.
Show/Hide Answer
Option D : personal trust accounts.
As enunciated, the concept behind the Prudent Man Rule was clearly oriented towards personal trust accounts. Under this rule, trustees must be impartial between income beneficiaries and remainder men and must achieve an equitable balance between current income and the preservation of principal in real terms.
Free CFA Practice Question No: 79:
Government regulation of charitable organizations and public pension plans.
Option A: has increased as these organizations have grown in size and importance.
Option B: none of these answers.
Option C: has lessened, since there is a growing trend away from charitable organizations since 1989.
Option D: is still absent, although there is an effort to change this.
Show/Hide Answer
Option A : has increased as these organizations have grown in size and importance.
Government regulation of charitable organizations and public pension plans has increased as these organizations have grown in size and importance. As such, members who are fiduciaries for these organizations must examine applicable law, client agreement and client guidelines for guidance as to their duties.
CFA Mock Exam Free Question No: 80:
Standard V (A) is known as _________.
Option A: Prohibition against Use of Material Nonpublic Information.
Option B: Duty to Employer.
Option C: Preservation of Confidentiality.
Option D: Interactions with Clients and Prospects.
Option E: None of these answers.
Option F: Investment Process.
Option G: Fair Dealing.
Option H: Professional Misconduct.
Show/Hide Answer
Option A :
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.
