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 Practice Test 31 Questions CFA Mock Exam 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: 301:
Sid Barnes is the senior most partner with Noble & Noble, a well-known brokerage firm. Bruce Lohmann is a senior partner who reports to Barnes. Lohmann is an AIMR member while Barnes is not. Recently, N&N’s research department identified a sterling investment opportunity and Barnes decided to allow some of the largest discretionary accounts to benefit from this first. He directed Lohmann to take the appropriate steps and in turn, Lohmann assigned Doug Jardine, a senior analyst, to complete the portfolio rebalancing. Doug, an AIM member, informed Bruce and Barnes that such a course of action would be in violation of the AIMR Standard IV (B.3) – Fair Dealing. Barnes told him that he was not aware of any such code and that in any case, the firm had not adopted it. If Doug refuses to carry out the action but Lohmann does, which of the following is /are true?
I. Barnes has violated the AIR code.
II. Lohmann has violated the AIM code.
III. Doug has violated the AIM code by disobeying his superiors.
Option A: I, II and III.
Option B: II only.
Option C: I and III only.
Option D: II and III only.
Option B : II only.
Barnes cannot be said to have violated the AIMR code since he’s not a member or a CFA candidate and does not have to abide by those rules. Lohmann, on the other hand, has violated the code in two ways: first, as the senior most AIMR member in the firm, it was his responsibility to ensure that Barnes knew not only about the AIM code but also Lohmann’s obligation to uphold it. Barnes’ ignorance about the code implies Lohmann violated Standard III (A) – Obligation to Inform Employer of Code & Standards. Second, by allowing some of the largest discretionary accounts to benefit from the research first, he violated AIM standard IV (B.3) – Fair Dealing. Doug, on the other hand, dissociated himself from the activity and did not violate any standard.
CFA Level 1 Exam Question No: 302:
If the use of leverage is ________ must include the effects of the leverage.
Option A: discretionary.
Option B: mandatory.
Option C: nondiscretionary.
Option D: optional.
Option A: discretionary.
If the use of leverage is nondiscretionary (i.e. mandated by the client), performance must be presented on an all-cash basis.
Free CFA Level 1 Mock Exam Question No: 303:
When creating composites _________ returns must not be mixed with asset-plus-cash
Option A: model.
Option B: portfolio.
Option C: cash.
Option D: performance.
Option E: asset-only.
Option E : asset-only.
To be in compliance with the PS, a firm creating a composite must meet this requirement.
CFA Level 1 Free Practice Question No: 30:
When complying with Standard IV (B.3) – Fair Dealing, there are certain points one should be sure to address when establishing compliance procedures. Which of the following points is NOT mentioned in the Standards of Practice Handbook?
Option A: Simultaneous dissemination.
Option B: Establish procedures for determining material change.
Option C: Disclose levels of service.
Option D: Publish personnel guidelines for predissemination.
Option E: Limit the number of people involved.
Option F: Be flexible on the time frame between decision and dissemination.
Option G: Establish control over trading activity.
Option F : Be flexible on the time frame between decision and dissemination.
Members have an obligation to ensure that their firms establish compliance procedures requiring all employees who disseminate investment recommendations or actions to treat clients fairly. The number of people privy to an investment recommendation should be limited. The amount of time that lapses between the decision and the dissemination of the recommendation should be shortened. Guidelines must be established to prohibit persons who have prior knowledge from discussing a pending recommendation. Trading activities should be monitored and controlled. Procedures should be established to determine whether a change in an investment recommendation is considered material.
The organization should disclose to firms whether or not it offers two or more levels of service to clients for the same or different fees.
Free CFA Practice Question No: 305:
Michelieu tells a prospective client, “I may not have a long-term track record yet, but I’m sure that you’ll be very pleased with my recommendations and service. In the three years that l’ve been in the business, my equity-oriented clients have averaged a total return of more than 26 percent a year.” The statement is true, but Michelieu only has a few clients and one of his clients took a large position in a penny stock (against Michelieu’s advice) and realized a huge gain. This large return caused the average of of Michelieu’s clients to exceed 26 percent a year. Without this one investment, the average
gain would have been 8,percent a year. Has Michelieu violated the Standards?
Option A: Yes, because the statement misrepresents Michelieu’s track record.
Option B: Yes, because the statement about return ignores the risk preferences of his clients.
Option C: No, because the statement is a true and accurate description of Michelieu’s track record.
Option D: No, because Michelieu is not promising that he can earn a 26 percent return in the future.
Option A : Yes, because the statement misrepresents Michelieu’s track record.
Standard IV (B.6), Prohibition against Misrepresentation. Although Micheliu’s statement regarding the total return of his client’s accounts on average may be technically true, it is misleading because the majority of the gain resulted from one client’s large position taken against Micheliu’s advice. He has not taken steps to present a fair, accurate and complete presentation of performance. Even though he is not guarantee indenduture results, his words are still a misrepresentation of performance. Not disclosing the risk preferences of clients does not make a statement misleading and is not a violation of the Standards in this context.
CFA Level 1 Sample Question No: 306:
Martha Maris is a qualified investment advisor who has been handling Investment accounts of a few wealthy friends for a fee, She recently interviewed with Capital Management, In, and accepted a position as a money manager with them. She:
Option A: needs to inform only Capital Management about her old clients,
Option B: must inform Capital Management as well as all her old clients in writing about the arrangement.
Option C: does not have to inform her client friends about her employment with Capital Management,
Option D: does not have to inform Capital Management about her old clients since they were not retained through Capital Management.
Option B : must inform Capital Management as well as all her old clients in writing about the arrangement.
This is required by Standard III (B) – Duty to Employer.
Free CFA Level 1 Quiz Question NO: 307:
Which of the following are characteristics of material nonpublic information?
Option A: The information may be considered relevant by reasonable investors.
Option B: The information would have a substantial impact on the market if released.
Option C: All of these answers.
Option D: The information has not been generally disclosed.
Option C : All of these answers.
Information is “material” if its disclosure would be likely to have an impact on the price of a security or if reasonable investors would want to know the information before making an investment decision. In other words, information is material if it would significantly alter the total mix of information currently available regarding a security. Information is “nonpublic” until it has been disseminated to the marketplace in general and investors have had an opportunity to react to the information.
Free CFA Level 1 Quiz Question NO: 308:
According to the AIMR-Performance Presentation Standards, __________must be used when calculating investment performance.
Option A: benchmark.
Option B: asset-weighted return.
Option C: aggregate return.
Option D: total return.
Option D : total return.
Total return, including realized and unrealized gains plus income, must be used when calculating investment performance. Portfolios must not be switched from one composite to another unlessdocumented changes in client guidelines make switching appropriate. This is a requirement for calculation of returns.
Free CFA Practice Question No: 309:
Standard V (B) deals with –
Option A: independence and objectivity.
Option B: performance presentation.
Option C: preservation of confidentiality.
Option D: insider information.
Option E: fair dealing.
Option F: research report.
Option B : performance presentation.
The purpose of Standard V (B) is to state the responsibility of AIM members to avoid misrepresentation of the investment performance and encourages full disclosure of investment performance data to clients and client prospects.
CFA Mock Exam Free Question No: 300:
Performance results for a portfolio need to be presented with cash, _________ equivalents, or substitute assets.
Option A: composite.
Option B: multiple.
Option C: cash.
Option D: average.
Option C : cash.
Returns from cash and cash equivalents held in portfolios must be included in return calculations and the cash and cash equivalents must be included in the portfolio amount (total assets) on which the return is calculated.