Free CFA Level 1 Mock Exam is here for some practices. It reflects the latest CFA exam curriculum. It is a 2 hour 15 minutes, 90-question CFA practice test weighted to the guidance set by CFA Institute for the actual CFA exam.
The first way to do the CFA Level 1 mock exam is online and the second one is offline by downloading the PDF questions here https://3h.rs/L1MockPDF and submitting the answers here https://3h.rs/CFAL1Mock when you are done.
Below are some of the questions included in the CFA Level 1 Mock Exam. If you want to find the full version:
1. Ethical and Professional Standards
Sumita Khatri wrote a research report and followed the necessary due diligence steps before sharing the report with her client. It turned out that there was a mistake in the report. This was pointed out by her client. Khatri apologized and re-submitted the corrected report.
Did Khatri violate any CFA Institute Standards?
A. No.
B. Yes, relating to performance presentation.
C. Yes, relating to misconduct.
2. Ethical and Professional Standards
Aryana Reid, CFA, is a private wealth manager. She writes a popular blog called “Aryana’s Investments” that has several thousand subscribers. The objective of the blog is to attract new clients; every post is also sent as an e-mail to its subscribers. The blog posts are usually a detailed analysis about her investment recommendations and actions.
Recently, Reid issued a sell recommendation for Jubilant Inc. However, a few days after publishing her initial recommendation, she decides to change the recommendation from sell to buy based on some new information.
In order to comply with the CFA Institute Standards, which of the following is the most appropriate method for disseminating the change in investment recommendation?
A. Publish the post and send it as a mail to the blog subscribers.
B. Publish the post, send a mail to blog subscribers and email her clients simultaneously.
C. Email her clients first.
3. Ethical and Professional Standards
Kent Miller is an investment adviser at UBN Investments, who is registered to take Level I of the CFA Exam. He meets with Carrie Hartford, a new client of the firm, who has just moved her account from Northern Investment Bank. She tells Miller that she has read about derivatives and would like to invest in them. Miller explains the upside potential and downside risks of some strategies with derivatives and recommends protective put for her portfolio.
To be consistent with the CFA Institute Standards, Miller should:
A. determine Hartford’s needs, objectives, and tolerance for risk before making a recommendation.
B. explain to Hartford in detail about the characteristics of his firm and the investment vehicles it offers, including the nature of the industry.
C. explain to Hartford his recent candidacy in the CFA Program, and its importance within the investment community.
4. Ethical and Professional Standards
Justin Zoghlin, CFA, was hired as a wealth manager to manage the $2 billion estate of a family in Oklahoma a year ago. He was given the flexibility to choose his working hours. When Zoghlin took the job, he served as the President of his religious community that conducted social welfare programs on a regular basis. In addition, he managed the investments for his large extended family. He did not get paid for his religious community activity or the family investments. Seeing the impressive returns he generated, his friends persuaded him to manage their investments, as well.
Now, a year later, he has stopped serving the religious community. He manages investments for non-family members, but charges 10% of the portfolio value as his fee. Zoghlin has not informed his employer of any of these activities.
With regard to which of the business activities, has Zoghlin least likely violated the CFA Institute Standards of Professional Conduct?
A. Serving the religious community.
B. Managing non-family investments.
C. Managing family investments.
5. Ethical and Professional Standards
Rani Kaporwala, CFA, an analyst at Smart Securities, has just finished writing a newsletter to the firm’s clients about a new investment strategy involving derivatives. Due to the complex nature of the strategy designed to manage risk and the different trading patterns involved in various economic scenarios, Kaporwala decides to include only the top three liquid securities, with relatively lower volatility in the market to explain the strategy. She consequently withholds information regarding the portfolio construction and valuation scheme.
Has Kaporwala violated any CFA Institute Standards?
A. No.
B. Yes, relating to communications with clients and prospective clients.
C. Yes, relating to fair dealing.
6. Ethical and Professional Standards
Cara Knightly is a much respected portfolio manager at RMC investment management company. Knightly is planning to sell her shares in General Tyre Company (GTC) from her personal portfolio to pay for her child’s college tuition. Knightly duly informs her supervisor according to the firm’s pre-clearance procedures and receives approval. RMC has however published its research report on GTC with a “buy” recommendation, and Knightly has advised some of her clients to purchase the stock for their portfolios, where suitable.
Has Knightly violated any CFA Institute Standards?
A. Yes, related to priority of transactions.
B. Yes related to loyalty, prudence, and care.
C. No.
7. Ethical and Professional Standards
Andy McCarthy, CFA, resigns from his position as a portfolio manager with Drexell Investments and takes up a part-time teaching position at a local college. For the next two years, he does not file a completed Professional Conduct Statement with CFA Institute and does not pay his CFA Institute membership dues.
After two years, McCarthy starts his independent practice as a financial analyst and writes his CFA designation on his business cards and next to his name. McCarthy does not reinstate his CFA Institute membership by filing his Professional Conduct Statement and paying the CFA membership fees. He feels that for the past two years he has not been involved in the investment profession therefore he is not required to reinstate his CFA Institute membership.
Has McCarthy violated any CFA Institute Standards?
A. No.
B. Yes, relating to reference to the CFA Institute, the CFA designation, and the CFA Program.
C. Yes, relating to loyalty.
8. Ethical and Professional Standards
During lunch with his friend, who is an analyst in the software industry, John Smith, CFA, a trader with Zeta Capital finds out that there are rumors of a merger between two software companies. Smith has always valued his friend’s suggestions and the next day places a large buy order to be distributed equally to all discretionary accounts for which the target firm is suitable. He also informs all his non-discretionary accounts of the recommendation.
By acting on his friend’s advice did Smith violate any CFA Institute Standards of Professional Conduct?
A. Yes, with respect to diligence and reasonable basis.
B. Yes, with respect to priority of transactions.
C. Yes, with respect to fair dealing.
9. Ethical and Professional Standards
Which of the following is least likely correct under the Code and Standards?
A. Financial analysts may use conclusions as recommendations derived from analysis of public and non material nonpublic information, even if those conclusions would have been material inside information if directly communicated by the company.
B. Financial analysts are free to act on material nonpublic information if it is received from industry experts.
C. Member or candidate should make reasonable efforts to achieve public dissemination of material information.
10. Ethical and Professional Standards
Stewart is an analyst at a small investment firm, Axel Capital. While meeting a former colleague named Andre, Stewart finds out that GYTEX will announce its quarter-end earnings before the end of the week. Andre expects GYTEX’s quarter-end earnings to be almost 8% higher than the current market expectations. Stewart has always valued Andre’s opinion in the past.
The next day, Stewart checks his firm’s recommendation of the stock and learns that it is a “hold”. The portfolio managers at Axel have not placed any purchase orders for GYTEX. Stewart feels he does not have a reasonable basis to suggest a change in recommendation to the portfolio managers of his firm. The following day, Stewart buys a significant number of GYTEX’s shares for his personal portfolio and completes the transaction a day before the earnings announcement. Prior to trading in GYTEX’s stock, Stewart conforms to the compliance procedures of his firm, receives pre-clearance for trade and fulfils all the reporting requirements of Axel.
Has Stewart violated the Code and Standards?
A. Yes, relating to priority of transactions.
B. No.
C. Yes, relating to material nonpublic information.
