C F A I N S T I T U T E · C H A R T E R E D F I N A N C I A L A N A LY S T
CFA Level 1 - Exam 2 Morning
Session
Practice Question Bank
Comprehensive Review with 39 Questions, Answers & Rationales
Level 1 — Ethics, Quant, Economics, FRA, Corporate Finance, Portfolio,
Equity & Fixed Income
Edition 1 · August 2026
,Table of Contents
1. Instructions for Use 2
2. Practice Questions with Answers & Rationales — CFA Level 1 - Exam 2 Morning Session 2
CFA · Chartered Financial Analyst Page 1
, CFA LEVEL 1 - EXAM 2 MORNING SESSION GUIDE INSTRUCTIONS & PRACTICE QUESTIONS
How to Use This Guide
Read each stem, choose your answer, then check the rationale directly below it. The correct option is marked, and each
wrong option is explained so you understand why it's wrong — not just that it is. This guide contains 39 questions covering
the full scope of the CFA Level 1 - Exam 2 Morning Session content with detailed rationales for every question.
Category: CFA Level 1 - Exam 2 Morning Session
1 Ed Socho states that in a GIPS-compliant presentation, (1) total firm assets must include all accounts,
including non-fee paying accounts and accounts where the client makes the investment decisions, and (2)
the firm must include the performance results of third-party advisors selected by the firm in its composite
performance. Are Socho's statements accurate?
A Both of these statements are accurate
B Neither of these statements is accurate
C Only one of these statements is accurate
Why C is correct: Statement (1) is accurate: Total firm assets must include all accounts, including non-fee paying
accounts and accounts where the client makes investment decisions. Statement (2) is inaccurate: The firm is NOT
required to include the performance results of third-party advisors selected by the firm in its composite performance.
Therefore, only one statement is accurate.
A — Statement (2) is inaccurate.
B — Statement (1) is accurate.
2 Upon completing investment reports on equity securities, Shannon Mason, CFA, routinely shreds all
documents used in preparing the reports. In a report on UltraTech Software, Mason provides detailed
explanations of the upside and downside risks associated with UltraTech, but provides no information on a
sharp decrease in insider buying over the last 12 months. Mason has most likely violated:
A CFA Institute Standards by failing to maintain adequate records
B CFA Institute Standards by neglecting to include the insider buying information in the investment report
C none of the Standards
Why C is correct: Mason has not violated the Standards. Shredding documents used in preparing reports is not a
violation if the firm's record retention policies are met. Also, insider buying information is not material nonpublic
information (it is publicly available) and Mason is not required to include every piece of information in the report.
A — Shredding documents is not a violation if done in accordance with firm policy.
B — Mason is not required to include all available information in the report.
CFA Level 1 - Exam 2 Morning
Session
Practice Question Bank
Comprehensive Review with 39 Questions, Answers & Rationales
Level 1 — Ethics, Quant, Economics, FRA, Corporate Finance, Portfolio,
Equity & Fixed Income
Edition 1 · August 2026
,Table of Contents
1. Instructions for Use 2
2. Practice Questions with Answers & Rationales — CFA Level 1 - Exam 2 Morning Session 2
CFA · Chartered Financial Analyst Page 1
, CFA LEVEL 1 - EXAM 2 MORNING SESSION GUIDE INSTRUCTIONS & PRACTICE QUESTIONS
How to Use This Guide
Read each stem, choose your answer, then check the rationale directly below it. The correct option is marked, and each
wrong option is explained so you understand why it's wrong — not just that it is. This guide contains 39 questions covering
the full scope of the CFA Level 1 - Exam 2 Morning Session content with detailed rationales for every question.
Category: CFA Level 1 - Exam 2 Morning Session
1 Ed Socho states that in a GIPS-compliant presentation, (1) total firm assets must include all accounts,
including non-fee paying accounts and accounts where the client makes the investment decisions, and (2)
the firm must include the performance results of third-party advisors selected by the firm in its composite
performance. Are Socho's statements accurate?
A Both of these statements are accurate
B Neither of these statements is accurate
C Only one of these statements is accurate
Why C is correct: Statement (1) is accurate: Total firm assets must include all accounts, including non-fee paying
accounts and accounts where the client makes investment decisions. Statement (2) is inaccurate: The firm is NOT
required to include the performance results of third-party advisors selected by the firm in its composite performance.
Therefore, only one statement is accurate.
A — Statement (2) is inaccurate.
B — Statement (1) is accurate.
2 Upon completing investment reports on equity securities, Shannon Mason, CFA, routinely shreds all
documents used in preparing the reports. In a report on UltraTech Software, Mason provides detailed
explanations of the upside and downside risks associated with UltraTech, but provides no information on a
sharp decrease in insider buying over the last 12 months. Mason has most likely violated:
A CFA Institute Standards by failing to maintain adequate records
B CFA Institute Standards by neglecting to include the insider buying information in the investment report
C none of the Standards
Why C is correct: Mason has not violated the Standards. Shredding documents used in preparing reports is not a
violation if the firm's record retention policies are met. Also, insider buying information is not material nonpublic
information (it is publicly available) and Mason is not required to include every piece of information in the report.
A — Shredding documents is not a violation if done in accordance with firm policy.
B — Mason is not required to include all available information in the report.
