Q1.

According to the Standards, which of the following information requires

disclosure?

○ Information 1: A member's brother inherits a significant ownership of a stock

that is part of the member's research coverage universe. The member has no
beneficial ownership in her brother's investments.
○ Information 2: A member, a portfolio manager at an investment firm, does
unpaid volunteer work during holiday weekends at a charity.
○ Information 3: Firm enters into an agreement with a mutual fund to receive
commissions for recommending the fund to the firm's clients.
A. Information 1
B. Information 2
C. Information 3

Q2. According to the Standard relating to suitability, a member should update a

client's Investment Policy Statement at least:

A. quarterly.
B. semiannually.
C. annually.

Q3. Michael Pak has recently retired from the investment business. A CFA Institute
member for 20 years, Pak has decided not to pay his CFA Institute dues or file the
annual Professional Conduct Statement. Applying to join the investment committee of
a charitable organization, Pak writes: "I was a CFA Institute member for 20 years."
Has Pak most likely violated the Standards?

A. No
B. Yes, the Standard relating to conduct as participants in CFA Institute programs
C. Yes, the Standard relating to reference to CFA Institute, the CFA designation,
and the CFA Program

Q4. Which of the following is consistent with the recommended procedures for
compliance with the Standard relating to referral fees?

○ Statement 1: "Investment professionals should provide to their clients

notification of approved referral fee programs."
○ Statement 2: "Members should provide their employer at least annual updates
on the amount and nature of compensation received."
A. Statement 1 only
B. Statement 2 only
C. Both Statement 1 and Statement 2
Q5. Ritu Jain, CFA, is preparing to leave her firm and join a new employer. Prior to
leaving the firm, Jain calls all her clients informing them of her decision to leave.
When asked by the clients, Jain states lack of confidence in the firm's leadership as the
reason for her departure and also mentions that more employees are likely to leave
soon. Jain has violated the Standard(s) relating:

A. only to loyalty.
B. only to preservation of confidentiality.
C. both to loyalty and to preservation of confidentiality.

Q6. Which of the following is not a requirement of Standard I, Integrity of Capital

Markets? Members and candidates:

A. must promote the integrity and viability of the global capital markets for the
ultimate benefit of society.
B. must not engage in practices that distort prices or artificially inflate trading
volume with the intent to mislead market participants.
C. who possess material nonpublic information that could affect the value of an
investment must not act or cause others to act on the information.

Q7. Benefits of compliance with the GIPS standards least likely include:

A. strengthening internal controls.

B. participating in competitive bidding.
C. eliminating in-depth due diligence for investors.

Q8. Abe Seneca, CFA, supervises a team of analysts who create index funds for
institutional investors. When Seneca makes sales demonstrations without his
colleagues to potential clients simulating the fund's performance, the scenarios he
prepares show outcomes based on assumptions reflecting upside bias and positive risk
assessments.
Gail Tremblay, CFA, an analyst in Seneca's group, observes that the actual
performance of these index funds is less than indicated in the scenario outcomes
shown in the sales meetings. Seneca least likely violated which of the following
Standards.

A. Loyalty
B. Performance Presentation
C. Responsibilities of Supervisors

Q9. Maria Bendez, CFA, is a well-known analyst. She sends her recommendations to
all of her firm clients. However, Bendez does not disseminate her recommendations to
the public even though she believes that her recommendations could affect security
prices. A client calls her and says: "Maria, thank you! Every time you send me your
recommendations, I think you provide me with an advantage over other market
participants." Has Bendez most likely violated the Standards?

A. No
B. Yes, the Standard relating to material nonpublic information
C. Yes, the Standard relating to material nonpublic information and the Standard
relating to fair dealing

Q10. According to the Standard relating to preservation of confidentiality, a member

is required to maintain confidentiality of information communicated to her:

A. by her former clients only.

B. by her prospective clients only.
C. both by her former clients and by her prospective clients.

Q11. A firm manages $500 million in large-cap equity portfolios. Of this,

non-fee-paying portfolios amount to $50 million, and fee-paying non-discretionary
portfolios total $75 million. To be compliant with the GIPS standards, the firm must
present the value of its large-cap composite as:

A. $375 million.
B. $425 million.
C. $450 million.

Q12. Toni Lynn, CFA, is a research analyst. Lynn relies on her colleagues to
determine whether the third-party research she uses is sound. Lynn also uses content
from personal blogs and social media websites for her research after concluding it is
sound. Has Lynn most likely violated the Standard relating to diligence and reasonable
basis?

A. No
B. Yes, by using content from personal blogs and social media websites for her
research
C. Yes, by relying on her colleagues to determine whether the third-party research
is sound

Q13. Jolene Campbell, CFA, a well-known analyst, is working on a report about XLK
Autos (XLK). XLK is developing a fuel-efficient car about which no public
information is yet available. Campbell uses financial data and information gathered
from automobile experts not connected to XLK about the commercial viability of
XLK's project. She then issues a "buy" recommendation on the stock. Campbell sends
her report exclusively to her firm's clients even though
she expects her report to impact XLK's stock price. Has Campbell most likely violated
the Standard relating to material nonpublic information?

A. No
B. Yes, because she uses information that is not yet public
C. Yes, because she fails to make her recommendation public

Q14. According to the recommended procedures for compliance with the Standard
relating to additional compensation arrangements, a member should make an
immediate written report specifying the proposed compensation arrangements:

A. only to her supervisor.

B. only to her supervisor and to her firm's compliance officer.
C. to her supervisor, to her firm's compliance officer, and to her clients.

Q15. Megan Chandra, CFA, allocates an oversubscribed IPO suitable for all the
accounts she manages. Chandra does not allocate the IPO her mother's standard
fee-paying account or her husband's non-fee-paying account. Has Chandra violated
the Standards?

A. No
B. Yes, by not allocating the IPO allocation to her mother's account
C. Yes, by not allocating the IPO allocation to both her husband's and her mother's
accounts

Q16. Which of the following is not a recommended procedure for compliance with the
Standard relating to misrepresentation? Firms should:

A. avoid verifying information from third-party firms for timely trade executions.
B. specifically designate which employees are authorized to speak on behalf of the
firm.
C. periodically review employee correspondence that contains representations of
individual qualifications.

Q17. A portfolio manager is hired by an executive manager of a trust. The duty of

loyalty is owed to the:

A. trustee.
B. executive manager.
C. beneficiaries of the trust.
Q18. According to the recommended procedures for compliance with the Standard
relating to record retention, who is most likely responsible for maintaining the records
that support investment actions?

A. The firm
B. Research analysts
C. The chief compliance officer

Q19. To be compliant with the GIPS standards, after a firm presents five years of
performance history, it must build up to a minimum of:

A. 7 years of compliant performance presentation.

B. 10 years of compliant performance presentation.
C. 15 years of compliant performance presentation.

Q20. Meghna Shah, CFA, manages a small-cap fund. Applying mosaic theory, Shah
concludes that AK Tech (AKT) is overpriced and sells the fund's significant holding in
AKT for a profit. Shah is aware that her transaction could impact AKT's price because
the position is large enough to require disclosure to stock exchanges. A blog tracking
stock exchange news reports Shah's transaction, which leads to 8% decline in AKT's
price, causing losses to other investors.
Has Shah violated the Standards?

A. No
B. Yes, the Standard relating to market manipulation
C. Yes, the Standard relating to material nonpublic information

Q21. Praful Chandarana, CFA, is starting a new business to offer investment

consulting services to pension fund trustees in response to a new regulation that
requires all pension fund Investment Policy Statements (IPS) to be reviewed and
approved by an independent CFA charterholder. Prior to starting the new business, he
meets with the pension fund regulator to clarify if the CFA charterholder undertaking
the IPS review should be a licensed financial advisor by the capital markets regulator.
The capital markets regulator requires and grants licenses to those giving investment
advice to clients. The pension regulator states that they do not require the CFA
charterholder to hold a financial advisor's license, despite financial-related advice
being given to the pension funds during any IPS review. Chandarana therefore starts
his new business to undertake IPS reviews without obtaining a financial advisor's
license from the capital markets regulator. Subsequently, when clients of his former
employer contact him he informs them of his new company and the services he offers.
Does Chandarana most likely violate the Code and Standards?
 A. No
B. Yes, the Standard relating to loyalty
C. Yes, the Standard relating to knowledge of the law

Q22. Arshani Madan, CFA, develops a product that selects mutual funds based on
historical data. Madan tests her methodology and produces simulated performance
results. The promotional material for the product does not indicate that the results are
simulated. Madan has violated the Standards relating:

A. only to performance presentation.

B. only to communication with clients and prospective clients.
C. both to performance presentation and communication with clients and
prospective clients.

Q23. With respect to issuer-paid research, members are not required to:

A. strictly limit the type of compensation they accept from the covered company.
B. fully disclose the nature of compensation received from the covered company.
C. accept compensation related only to investment performance of the covered
company.

Q24. Kush Shah, CFA, is the chief investment officer of an investment firm. Shah
discovers during a routine review of the firm's trading system that the firm
erroneously bought shares of lY Steel (IYS) for several clients. Shah immediately
sells lY shares and realises significant profits for the clients. Later, Shah outsources a
portion of the clients' portfolios to an external manager. Shah does not notify the firm's
clients about the external manager because the fund's stock selection process remains
unchanged. Shah has violated the Standards because he failed to notify the clients:

A. only about the erroneous purchase of lY shares.

B. only about outsourcing a portion of the clients' portfolios to an external
manager.
C. about the erroneous purchase of IY shares and about outsourcing a portion of
the clients' portfolios to an external manager.

Q25. According to the Standard relating to conduct as participants in CFA Institute

programs, CFA candidates are permitted to:

A. disclose broad topical areas not tested on the exam.

B. discuss curriculum material in study groups in preparation for the exam.
C. disclose information on formulas tested in the exam after taking the exam.

Q26. The Standard relating to misconduct addresses:

 A. only all conduct that reflects poorly on members' professional integrity.
B. only all actions violating trust in members' professional and private lives.
C. both all conduct that reflects poorly on members' professional integrity and all
actions violating trust in members' professional and private lives.

Q27. A firm claiming compliance with the GIPS standards:

A. can claim compliance on specific composites.

B. is responsible for maintaining that compliance.
C. must be verified by an independent third party.

Q28. The combination of projects that provides the best choice is:

A. 1 and 2.
B. 1, 3, and 4.
C. 2, 3, and 4.

Q29. The interest coverage ratio is:

A. 14.
B. 15.
C. 16.
Q30. If trading partners are to benefit from allowing the free movement of factors of
production among their members, the trading partners most likely need to form a:

A. customs union.
B. free trade area.
C. common market.

Q31. With respect to debt securities measured at fair value through other
comprehensive income:

A. both interest income and unrealized gains and losses are recognized in other
comprehensive income.
B. interest income is recognized in other comprehensive income while unrealized
gains and losses are not recognized.
C. interest income is recognized in profit and loss while unrealized gains and
losses are recognized in other comprehensive income.

Q32. For a non-colluding oligopoly with a price leader, the optimal market price is
determined by the:

A. dominant firm's demand schedule.

B. market's aggregate demand curve.
C. market's marginal revenue and marginal cost.

Q33. Changes to the allowance for inventory obsolescence have already been reflected
in cost of sales. The days of inventory on hand (based on average inventory and
365-day year) for Year 2 is closest to:
A. 45.
B. 49.
C. 52.
Q34. The standard deviation of the company's earnings is closest to:

A. $115 million.
B. $134 million.
C. $375 million.

Q35. Both monetary and fiscal policies can most likely be used by a government to:

A. redistribute income and wealth.

B. affect the level of interest rates.
C. influence the level of economic activity.

Q36. Which of the following statements is most accurate? Fintech applications:

A. can perform tasks at levels surpassing human capabilities.

B. eliminate the need for humans in providing investment advice to retail
investors.
C. use models that outperform traditional statistical models in revealing linear
relationships.

Q37. When estimating a target capital structure, the equity weight associated with a
debt-to-equity ratio of 0.6 is closest to:
A. 37.5%
B. 40.0%.
C. 62.5%.

Q38. A company is forecasting 10% organic growth in revenues. The company

believes sales volume will grow by 6.4%.
The forecasted price/mix impact for the company is closest to:
A. 3.4%.
B. 17.0%.
C. 56.3%
Q39. An account has a stated annual interest rate of 3.6% with monthly compounding.
The number of years it will take for an initial investment in the account to double is
closest to:
A. 19.3.
B. 19.6.
C. 20.0.

Q40. When a company's payables turnover ratio is lower compared to its peers, the
company is most likely:

A. utilizing early payment discounts.

B. taking advantage of lenient supplier terms.
C. receiving payments from customers faster than its peers.

Q41. In hypothesis testing, which of the following is stated in terms of population

parameters?

A. The null hypothesis only

B. The alternative hypothesis only
C. Both the null hypothesis and the alternative hypothesis

Q42. The median value of the items is closest to:

A. 3.
B. 4.
C. 5.

Q43. In ESG factor analysis, a company's ownership of stranded assets is most likely
considered a(n):

A. environmental risk.
B. social risk.
C. governance risk.

Q44. Using market levels as signals to measure the likelihood of a geopolitical risk
best describes:
 A. signposting.
B. scenario analysis.
C. geopolitical risk translation into investment action.

Q45. A rising inventory-sales ratio most likely indicates the economy is undergoing
a:

A. recovery.
B. slowdown.
C. contraction.

Q46. Compared with its net income, a mature company's operating cash flow is most
likely:

A. lower.
B. the same.
C. higher.

Q47. A firm reports sales of €50,000 for a year ended 31 December. Its accounts
receivable balances were €6,000 on 1 January of the year and €7,500 on 31 December.
The company's cash collections from sales for the year is closest to:
A. €42,500.
B. €48,500.
C. €51,500

Q48. Which of the following most likely enforces financial reporting requirements?

A. Regulatory authorities only

B. Standard-setting bodies only
C. Both regulatory authorities and standard-setting bodies
Q49. The percentage of intangible assets pledged as security against borrowings in
Year 2 is closest to:
A. 9.9%.
B. 15.0%.
C. 15.3%.

Q50. If differences between accounting profit and taxable income are recoverable,
deferred tax assets are created when:

A. accounting profit is less than taxable income.

B. accounting profit is greater than taxable income.
C. income taxes payable is less than income tax expense.

Q51. Which of the following statements regarding inventory valuation is most

accurate?

A. IFRS defines market value as net realizable value less a normal profit margin.
B. Both IFRS and US GAAP allow the reversal of write-downs back to the
original cost.
C. Both IFRS and US GAAP allow agricultural inventories to be valued at net
realizable value.
Q52. The predicted change in the nominal US spot exchange rate is closest to:
A. -0.5%.
B. 4.5%.
C. 5.5%.

Q53. Based on each company's debt-to-capital and financial leverage ratios, which
company is the most solvent?

A. Company A
B. Company В
C. Company C

Q54. An investor is considering three investments:

● Investment 1 makes 20 annual payments of $50,000, starting one year from

today.
● Investment 2 makes 25 annual payments of $45,000, starting today.
● Investment 3 makes annual payments of $40,000 indefinitely, starting one year
from today.
If the investor's discount rate is 10% per year, which investment has the highest
present value?

A. Investment 1
B. Investment 2
C. Investment 3

Q55. Under US GAAP, which of the following should be reported separately from
continuing operations on the income statement?

A. Restructuring charges
B. Gain or loss from sale of an asset
C. Results of discontinued operations

Q56. A company receives a subscription payment for a publication to be delivered

next fiscal year. Ignoring income taxes, the company would recognize in the current
fiscal year an increase in:

A. assets and revenue.

B. assets and liabilities.
C. liabilities and revenue.

Q57. If the target return is 5% per quarter, the target downside deviation is closest to:
A. 4.50%.
B. 11.92%.
C. 20.29%.

Q58. A central bank most likely:

 A. will not lend money to banks facing shortages.
B. is a monopoly supplier of a country's currency.
C. does not manage a country's foreign currency reserves.

Q59. Which of the following statements about prediction intervals is most accurate?
All else being equal:

A. the width of the prediction interval does not depend on the standard error of the
estimate.
B. a smaller variation of the independent variable will result in a narrower
prediction interval.
C. a larger sample size in the regression estimation will result in a smaller
standard error of the forecast.

Q60. In capital investment decisions, project sequencing is most likely a type of:

A. timing option.
B. flexibility option.
C. fundamental option.

Q61. The arithmetic and geometric mean are calculated for the same data. If there is
variability in the data, compared with the arithmetic mean, the geometric mean will
most likely be:

A. smaller.
B. equal.
C. greater.

Q62. As a result of the second revaluation, the company recognizes in Year 2:

A. a €5 million loss on the income statement.

B. a €5 million loss in other comprehensive income.
 C. neither a loss on the income statement nor a loss in other comprehensive
income.

Q63. Which of the following statements about kurtosis is most accurate?

A. A fat-tailed distribution is referred to as platykurtic.

B. All distributions with kurtosis above zero are fat-tailed.
C. The calculation for kurtosis involves finding the average of deviations from the
mean raised to the fourth power.

Q64. Which of the following is a secondary source of liquidity?

A. Free cash flow

B. Dividend suspension
C. Short-term investment portfolio

Q65. Based on the sample, the slope coefficient of the simple linear regression of Y to
X is closest to:
A. 0.80.
B. 1.03.
C. 1.33.

Q66. A company's ability to support debt most likely improves with a(n):

A. increase in liquidity.
B. increase in leverage ratio.
C. decrease in interest coverage.

Q67. Which of the following is an assumption in Modigliani and Miller's capital

structure framework?

A. Investors can lend and borrow at the risk free rate

B. Interest expense is deductible from income for tax purposes
C. Investors have heterogeneous expectations about future corporate earnings
 Q68. Which of the following sampling methods involves selecting every kth member
from a population until a desired sample size is obtained?

A. Cluster sampling
B. Systematic sampling
C. Convenience sampling

Q69. A company's interest payments are fully tax deductible. When tax rates increase,
the company's cost of debt:

A. decreases.
B. remains the same.
C. increases.

Q70. A corporate takeover in which shareholders are persuaded to vote for a group
seeking a controlling position on the board of directors best describes a:

A. tender offer.
B. proxy contest.
C. hostile takeover.

Q71. Which of the following most likely provides an opportunity for a company's
management to issue low-quality financial reports?

A. Ineffective board of directors

B. Concern about future career opportunities
C. Incentive compensation based on earnings

Q72. Quantitative easing addresses the monetary policy challenges most likely caused
by:

A. expected periods of deflation.

B. actions of bond market vigilantes.
C. inflationary demand shocks or supply shocks.

Q73. The NZD/EUR (amount of NZD per 1 EUR) spot rate is 1.5453. If the 3-month
forward discount is 24 points, the 3-month forward rate is closest to:
A. 1.54290.
B. 1.54770.
C. 1.54901.
Q74. The equipment is considered impaired under:

A. IFRS only.
B. US GAAP only.
C. both IFRS and US GAAP.

Q75. For a company paying preferred dividends, the components needed to compute
basic EPS are net income:

A. and the weighted average number of common shares outstanding.

B. preferred dividends, and the weighted average number of common shares
outstanding.
C. preferred dividends, additional shares issued if preferred is converted, and the
weighted average number of common shares outstanding.

Q76. A company's cash contribution to its defined contribution pension plan is

recorded on the company's statement of cash flows as a(n):

A. operating cash outflow.

B. investing cash outflow.
C. financing cash outflow.

Q77. Assume that a central bank has decided to lower interest rates in the economy.
To carry out this policy, the central bank will most likely:

A. sell securities.
B. buy securities.
C. increase required reserve requirements.

Q78. Part of the conflict between shareholders and debtholders is that shareholders
prefer:

A. less business risk than debt holders.

B. more equity issuance than debtholders.
 C. greater financial leverage than debt holders.

Q79. If the marginal tax rate is 20% and interest expense is tax deductible, the
company's WACC is:
A. 9.80%.
B. 10.00%.
C. 10.25%.

Q80. An analysis used to forecast earnings that shows the changes in key financial
quantities that result from alternative sets of economic events best describes which of
the following techniques?

A. Simulation
B. Sensitivity analysis
C. Scenario analysis

Q81. Which of the following is most likely a feature of sole proprietorships?

A. Operational complexity
B. Existence of a legal identity
C. Taxation of business profits as personal income

Q82. With respect to the cash flow statement, under US GAAP, interest paid is
reported as a(n):

A. investing activity.
B. financing activity.
C. operating activity.

Q83. An expansionary fiscal policy is least likely to include an increase in:

A. tax rates.
B. budget deficit.
C. government expenditures.
Q84. Tiered pricing is best described as:

A. charging different prices at different times.

B. charging different prices to different buyers.
C. combining a low price on a piece of equipment with high-margin pricing on
repeat-purchase consumables.

Q85. The Herfindahl-Hirschman index (HHI) is more responsive than the

concentration ratio to:

A. the elasticity of demand.

B. potential entrants to the market.
C. mergers among the existing companies in the market.

Q86. In jackknife resampling:

A. the results are similar for every resample.

B. the required number of repetitions is the same as in bootstrap resampling.
C. each subsequent resample has one less observation than the previous resample.

Q87. Under US GAAP, which of the following is least likely a disclosure concerning
inventory?

A. The amount of the reversal of any write-down of inventories

B. The amount of inventories recognized as an expense during the period
C. The carrying amounts of inventories carried at fair value less costs to sell

Q88. A country seeking nationalism but willing to cooperate with other countries is
best classified as:

A. autarky.
B. bilateral.
C. hegemonic.
Q89. If the equity weighting is 70%, the fixed-income weighting is 30% and the
portfolio is rebalanced annually, the portfolio's annual geometric mean return is
closest to:
A. 0.60%.
B. 0.83%.
C. 1.82%.

Q90. Firms operating under a monopolistic competition market structure most likely:

A. have few competitors.

B. benefit from high barriers to entry.
C. sell products that are close substitutes for those offered by other firms.