Cfa Sample Lvl 1 Questions

Sample Level I Questions

These sample questions were developed to give candidates an indication of the question formats

used on the actual examination.

1. Anthony Buchard, CFA, disclosed a complaint by a former client on his annual professional

conduct statement. The CFA Institute Professional Conduct Program sent Buchard a Notice

of Inquiry and requested a copy of the client complaint. Buchard provided a copy of the

complaint; however, several parts of the complaint were blackened out. Buchard refused to

provide a complete copy of the complaint because it contained confidential client

information. According to the Standards of Practice Handbook, Buchard should:

A. provide a complete copy of the complaint to the Professional Conduct Program.

B. maintain all client information as confidential, including the information contained in the

client complaint.

C. sign a confidentiality agreement with the client that requires Buchard to keep the client

complaint confidential.

D. disclose only those parts of the complaint that contain information related to the client’s

illegal activities or that are outside the scope of the confidential client relationship.

2. According to the Standards of Practice Handbook, which of the following activities is least

likely to breach a member’s duty to a client?

A. Failing to vote proxies.

B. Failing to establish the investment objectives of the client.

C. Using soft dollar arrangements to pay firm management expenses.

D. Disclosing confidential client information to the CFA Institute Professional Conduct

Program.

3. Beth Patrick, a fixed income analyst at a brokerage company, assists her company’s traders

by developing in-house bond ratings to supplement those of the major bond rating services.

The traders use disparities in the ratings to construct profitable investment strategies. Patrick

makes inferences from nonmaterial private information and news events, which she reflects

in her bond ratings. Patrick’s approach:

A. reflects the mosaic theory.

B. violates confidentiality rules.

C. violates insider trading rules.

D. reflects the misappropriation of information theory.

4. Monique Stein, CFA, conducted a thorough analysis and issued a research report on a

manufacturing company. In the report, which was made available to all clients of her firm,

Stein included her opinion that she was uncertain about the ability of the company to perform

on a contract. The Chief Executive Officer of the company disagreed and submitted a

complaint to Stein’s supervisor. The complaint alleged that employees of the manufacturing

company explained the contract to Stein, but that she did not accept their explanation.

According to the Standards of Practice Handbook, did Stein violate the CFA Institute

Standard of Professional Conduct relating to:

communication with clients

and prospective clients? diligence and reasonable basis?

A. No No

B. No Yes

C. Yes No

D. Yes Yes

5. For an investment portfolio, the Sharpe ratio is used to measure:

A. risk per unit of mean return.

B. mean return per unit of risk.

C. risk per unit of mean excess return.

D.