CFA (Chartered Financial Analyst) Level 1 Mock Exam II
CFA (CHARTERED FINANCIAL ANALYST) LEVEL 1 MOCK EXAM II: 2026
MOCK EXAM A SESSION 1 PREPARATION FOR 2025/2026 WITH
COMPLETE 200 QUESTIONS AND CORRECT DETAILED ANSWERS
(VERIFIED ANSWERS) |BRAND NEW VERSION!!
John McCay, CFA, is an analyst who has prepared a report on the cable industry
based on research from a variety of sources and analysts. He compiles these
findings to form his own opinion and distributes the report to clients without
acknowledging his sources. McCay has violated the Standards by:
A. failing to cite the work of others.
B. failing to have a reasonable basis for his conclusions.
C. incorporating other analysts' research into his own work
A. failing to cite the work of others.
because according to Standard I(C), Misrepresentation, in order to prevent
plagiarism, members and candidates may use and distribute other sources'
research as long as they do not represent themselves as the authors. Members
should disclose and cite the sources of their information, so that the client is not
misled as to the level of expertise behind the report. One of the most egregious
practices in violation of this standard is the preparation of research reports
based on multiple sources of information without acknowledging the sources.
Therefore, McCay violated this Standard by failing to cite the work of others.
Gardner Knight, CFA, is a product development specialist at an investment bank.
Knight is responsible for creating and marketing collateralized debt obligations
(CDOs) consisting of residential mortgage bonds. In the marketing brochure for his
most recent CDO, Knight provided a list of the mortgage bonds from which the
CDO was created. The brochure also states "an independent third party, the
1|Page
, CFA (Chartered Financial Analyst) Level 1 Mock Exam II
collateral manager, has sole authority for the selection of all mortgage bonds used
as collateral in the CDO." However, Knight met with the collateral manager and
contributed to determining the bonds included in the CDO. Knight is least likely to
be in violation of which of the following Standards?
A. Suitability
B. Disclosure of Conflicts
C. Communication with Clients and Prospective Clients
A. Suitability
because there is no indication that the investment is unsuitable for investors
and in violation of Standard III(C), Suitability.
Meera Doka, CFA, manages an equity fund for clients. One day, the fund
experiences a large loss due to an event unforeseen by all market participants.
Prior to the event, Doka failed to disclose the risk of this event occurring to her
clients. One month later, Doka decides to outsource 5% of the fund's assets to an
external manager. She does not inform her clients of this change because the
external manager follows an investment process that is very similar to her fund's
process. Are Doka's actions consistent with the Standard relating to
communication with clients and prospective clients?
A. Yes
B. No, because she failed to disclose the risk that resulted in the large loss
C. No, because she failed to inform her clients about outsourcing 5% of the fund's
assets
C. No, because she failed to inform her clients about outsourcing 5% of the fund's
assets
2|Page
, CFA (Chartered Financial Analyst) Level 1 Mock Exam II
because it is not consistent with Standard V (B), Communications with Clients
and Prospective Clients, to fail to inform clients about the use of an outside
manager. A firm's investment policy may include the use of outside advisers to
manage various portions of clients' assets under management. Members and
candidates should inform the clients about the specialization or diversification
expertise provided by the external adviser(s). This information allows clients to
understand the full mix of products and strategies being applied that may affect
their investment objectives.
Guidance for Standards I-VII
demonstrate the application of the Code of Ethics and Standards of Professional
Conduct to situations involving issues of professional integrity
According to the Standards, if a member cannot discharge supervisory
responsibilities due to an inadequate compliance system, the member is:
A. only required to decline in writing to accept supervisory responsibility.
B. only required to report the inadequate compliance system to CFA Institute.
C. both required to decline in writing to accept supervisory responsibility and to
report the inadequate compliance system to CFA Institute.
A. only required to decline in writing to accept supervisory responsibility.
Correct because according to Standard IV(C), Responsibilities of Supervisor, if
the member or candidate clearly cannot discharge supervisory responsibilities
because of the absence of a compliance system or because of an inadequate
compliance system, the member or candidate should decline in writing to accept
supervisory responsibility until the firm adopts reasonable procedures to allow
adequate exercise of supervisory responsibility. There is no requirement to
report the firm's inadequate compliance system to the CFA Institute.
3|Page
, CFA (Chartered Financial Analyst) Level 1 Mock Exam II
A 12-year old investment firm adopts the GIPS standards. To claim compliance
with the GIPS standards, the firm is initially required to present GIPS-compliant
performance history:
A. for at least five years.
B. for at least ten years.
C. since the firm's inception date.
A. for at least five years
Correct because, according to GIPS, a firm is required to initially present, at a
minimum, five years of annual investment performance that is compliant with
the GIPS standards. If the firm or the composite has been in existence less than
five years, the firm must present performance since the firm's inception or the
composite inception date.
According to the Standard relating to loyalty, which of the following statements
are correct?
Statement 1: Members must not deprive their employer of the advantage of their
skills and abilities.
Statement 2: Members are required to subordinate important personal and family
obligations to their work.
A. Statement 1 only
B. Statement 2 only
C. Both Statement 1 and Statement 2
A. Statement 1 only
Correct because according to Standard IV(A), Loyalty, in matters related to their
4|Page
CFA (CHARTERED FINANCIAL ANALYST) LEVEL 1 MOCK EXAM II: 2026
MOCK EXAM A SESSION 1 PREPARATION FOR 2025/2026 WITH
COMPLETE 200 QUESTIONS AND CORRECT DETAILED ANSWERS
(VERIFIED ANSWERS) |BRAND NEW VERSION!!
John McCay, CFA, is an analyst who has prepared a report on the cable industry
based on research from a variety of sources and analysts. He compiles these
findings to form his own opinion and distributes the report to clients without
acknowledging his sources. McCay has violated the Standards by:
A. failing to cite the work of others.
B. failing to have a reasonable basis for his conclusions.
C. incorporating other analysts' research into his own work
A. failing to cite the work of others.
because according to Standard I(C), Misrepresentation, in order to prevent
plagiarism, members and candidates may use and distribute other sources'
research as long as they do not represent themselves as the authors. Members
should disclose and cite the sources of their information, so that the client is not
misled as to the level of expertise behind the report. One of the most egregious
practices in violation of this standard is the preparation of research reports
based on multiple sources of information without acknowledging the sources.
Therefore, McCay violated this Standard by failing to cite the work of others.
Gardner Knight, CFA, is a product development specialist at an investment bank.
Knight is responsible for creating and marketing collateralized debt obligations
(CDOs) consisting of residential mortgage bonds. In the marketing brochure for his
most recent CDO, Knight provided a list of the mortgage bonds from which the
CDO was created. The brochure also states "an independent third party, the
1|Page
, CFA (Chartered Financial Analyst) Level 1 Mock Exam II
collateral manager, has sole authority for the selection of all mortgage bonds used
as collateral in the CDO." However, Knight met with the collateral manager and
contributed to determining the bonds included in the CDO. Knight is least likely to
be in violation of which of the following Standards?
A. Suitability
B. Disclosure of Conflicts
C. Communication with Clients and Prospective Clients
A. Suitability
because there is no indication that the investment is unsuitable for investors
and in violation of Standard III(C), Suitability.
Meera Doka, CFA, manages an equity fund for clients. One day, the fund
experiences a large loss due to an event unforeseen by all market participants.
Prior to the event, Doka failed to disclose the risk of this event occurring to her
clients. One month later, Doka decides to outsource 5% of the fund's assets to an
external manager. She does not inform her clients of this change because the
external manager follows an investment process that is very similar to her fund's
process. Are Doka's actions consistent with the Standard relating to
communication with clients and prospective clients?
A. Yes
B. No, because she failed to disclose the risk that resulted in the large loss
C. No, because she failed to inform her clients about outsourcing 5% of the fund's
assets
C. No, because she failed to inform her clients about outsourcing 5% of the fund's
assets
2|Page
, CFA (Chartered Financial Analyst) Level 1 Mock Exam II
because it is not consistent with Standard V (B), Communications with Clients
and Prospective Clients, to fail to inform clients about the use of an outside
manager. A firm's investment policy may include the use of outside advisers to
manage various portions of clients' assets under management. Members and
candidates should inform the clients about the specialization or diversification
expertise provided by the external adviser(s). This information allows clients to
understand the full mix of products and strategies being applied that may affect
their investment objectives.
Guidance for Standards I-VII
demonstrate the application of the Code of Ethics and Standards of Professional
Conduct to situations involving issues of professional integrity
According to the Standards, if a member cannot discharge supervisory
responsibilities due to an inadequate compliance system, the member is:
A. only required to decline in writing to accept supervisory responsibility.
B. only required to report the inadequate compliance system to CFA Institute.
C. both required to decline in writing to accept supervisory responsibility and to
report the inadequate compliance system to CFA Institute.
A. only required to decline in writing to accept supervisory responsibility.
Correct because according to Standard IV(C), Responsibilities of Supervisor, if
the member or candidate clearly cannot discharge supervisory responsibilities
because of the absence of a compliance system or because of an inadequate
compliance system, the member or candidate should decline in writing to accept
supervisory responsibility until the firm adopts reasonable procedures to allow
adequate exercise of supervisory responsibility. There is no requirement to
report the firm's inadequate compliance system to the CFA Institute.
3|Page
, CFA (Chartered Financial Analyst) Level 1 Mock Exam II
A 12-year old investment firm adopts the GIPS standards. To claim compliance
with the GIPS standards, the firm is initially required to present GIPS-compliant
performance history:
A. for at least five years.
B. for at least ten years.
C. since the firm's inception date.
A. for at least five years
Correct because, according to GIPS, a firm is required to initially present, at a
minimum, five years of annual investment performance that is compliant with
the GIPS standards. If the firm or the composite has been in existence less than
five years, the firm must present performance since the firm's inception or the
composite inception date.
According to the Standard relating to loyalty, which of the following statements
are correct?
Statement 1: Members must not deprive their employer of the advantage of their
skills and abilities.
Statement 2: Members are required to subordinate important personal and family
obligations to their work.
A. Statement 1 only
B. Statement 2 only
C. Both Statement 1 and Statement 2
A. Statement 1 only
Correct because according to Standard IV(A), Loyalty, in matters related to their
4|Page
