CFA LEVEL I EXAM LATEST 2026 UPDATE 100
QUESTIONS AND DETAILED VERIFIED ANSWERS
FROM ACTUAL EXAMS TEST GRADE A+
1. Ethics – Code & Standards
A CFA candidate claims guaranteed returns to clients. This is:
A. Acceptable with disclosure
B. Acceptable if historically accurate
C. Prohibited
D. Encouraged
Answer: C. Prohibited
Guaranteeing returns violates CFA Standards—investment performance cannot be
assured.
2. Ethics – Material Nonpublic Information
Trading on insider information is:
A. Allowed if not shared
B. Allowed if analyst research exists
C. Prohibited
D. Allowed for small trades
Answer: C. Prohibited
Using material nonpublic information breaches market integrity.
3. Quantitative Methods – Time Value
Future value increases when:
A. Interest rate decreases
,B. Time decreases
C. Interest compounds
D. Principal decreases
Answer: C. Interest compounds
Compounding increases growth over time.
4. Quant – NPV Rule
A project should be accepted if:
A. IRR < discount rate
B. NPV < 0
C. NPV > 0
D. Payback < 1 year
Answer: C. NPV > 0
Positive NPV indicates value creation.
5. Economics – Demand Curve
A downward sloping demand curve reflects:
A. Income effect only
B. Substitution effect only
C. Law of demand
D. Law of supply
Answer: C. Law of demand
Higher prices reduce quantity demanded.
6. Economics – GDP
GDP includes:
A. Used goods
B. Illegal activities
,C. Final goods
D. Transfer payments
Answer: C. Final goods
GDP measures final production only.
7. Financial Reporting – Inventory
FIFO vs LIFO in rising prices:
A. FIFO lower income
B. FIFO higher income
C. Same income
D. FIFO higher COGS
Answer: B. FIFO higher income
FIFO results in lower COGS → higher profits.
8. Financial Reporting – Depreciation
Accelerated depreciation:
A. Lowers early expenses
B. Raises early profits
C. Increases early expenses
D. Has no impact
Answer: C. Increases early expenses
Higher depreciation reduces early income.
9. Corporate Finance – WACC
WACC decreases when:
A. Cost of equity rises
B. Debt increases (with tax shield)
, C. Taxes decrease
D. Risk increases
Answer: B. Debt increases (with tax shield)
Debt provides tax benefits lowering WACC.
10. Corporate Finance – IRR
IRR is:
A. Discount rate making NPV = 0
B. Return on assets
C. Payback period
D. Cost of capital
Answer: A. Discount rate making NPV = 0
IRR solves for zero NPV.
11. Equity – Market Efficiency
Semi-strong efficiency reflects:
A. Prices reflect public info
B. Prices reflect insider info
C. Prices reflect no info
D. Random pricing
Answer: A. Prices reflect public info
Public data is incorporated into prices.
12. Equity – Dividend Discount Model
Stock value equals:
A. Sum of future dividends discounted
B. Earnings growth rate
QUESTIONS AND DETAILED VERIFIED ANSWERS
FROM ACTUAL EXAMS TEST GRADE A+
1. Ethics – Code & Standards
A CFA candidate claims guaranteed returns to clients. This is:
A. Acceptable with disclosure
B. Acceptable if historically accurate
C. Prohibited
D. Encouraged
Answer: C. Prohibited
Guaranteeing returns violates CFA Standards—investment performance cannot be
assured.
2. Ethics – Material Nonpublic Information
Trading on insider information is:
A. Allowed if not shared
B. Allowed if analyst research exists
C. Prohibited
D. Allowed for small trades
Answer: C. Prohibited
Using material nonpublic information breaches market integrity.
3. Quantitative Methods – Time Value
Future value increases when:
A. Interest rate decreases
,B. Time decreases
C. Interest compounds
D. Principal decreases
Answer: C. Interest compounds
Compounding increases growth over time.
4. Quant – NPV Rule
A project should be accepted if:
A. IRR < discount rate
B. NPV < 0
C. NPV > 0
D. Payback < 1 year
Answer: C. NPV > 0
Positive NPV indicates value creation.
5. Economics – Demand Curve
A downward sloping demand curve reflects:
A. Income effect only
B. Substitution effect only
C. Law of demand
D. Law of supply
Answer: C. Law of demand
Higher prices reduce quantity demanded.
6. Economics – GDP
GDP includes:
A. Used goods
B. Illegal activities
,C. Final goods
D. Transfer payments
Answer: C. Final goods
GDP measures final production only.
7. Financial Reporting – Inventory
FIFO vs LIFO in rising prices:
A. FIFO lower income
B. FIFO higher income
C. Same income
D. FIFO higher COGS
Answer: B. FIFO higher income
FIFO results in lower COGS → higher profits.
8. Financial Reporting – Depreciation
Accelerated depreciation:
A. Lowers early expenses
B. Raises early profits
C. Increases early expenses
D. Has no impact
Answer: C. Increases early expenses
Higher depreciation reduces early income.
9. Corporate Finance – WACC
WACC decreases when:
A. Cost of equity rises
B. Debt increases (with tax shield)
, C. Taxes decrease
D. Risk increases
Answer: B. Debt increases (with tax shield)
Debt provides tax benefits lowering WACC.
10. Corporate Finance – IRR
IRR is:
A. Discount rate making NPV = 0
B. Return on assets
C. Payback period
D. Cost of capital
Answer: A. Discount rate making NPV = 0
IRR solves for zero NPV.
11. Equity – Market Efficiency
Semi-strong efficiency reflects:
A. Prices reflect public info
B. Prices reflect insider info
C. Prices reflect no info
D. Random pricing
Answer: A. Prices reflect public info
Public data is incorporated into prices.
12. Equity – Dividend Discount Model
Stock value equals:
A. Sum of future dividends discounted
B. Earnings growth rate
