PROFESSIONAL CERTIFICATION EXAM REVIEW
CFA Level I Exam
A+
2026/2027 | CFA Institute | Professional
Certification with Questions & Verified Answers
2026/2027
Official Exam Style Review — Ethical & Professional Standards, Quantitative Methods, Economics, Financial Reporting &
Analysis, Corporate Finance, Equity Investments, Fixed Income, Derivatives, Alternative Investments, Portfolio Management
A+ QUESTIONS 6 SECTIONS 100%
VERIFIED FULL COVERAGE RATIONALES
CATEGORIES
■ Ethical & Professional Standards
■ Quantitative Methods & Economics
■ Financial Reporting & Analysis
■ Corporate Finance & Equity Investments
■ Fixed Income & Derivatives
■ Alternative Investments & Portfolio Management
STUVIAACTUALEXAM
, SECTION 1 — Ethical & Professional Standards
Q1. A CFA charterholder works for a brokerage firm and receives a research report from a third-party firm that contains material
nonpublic information about a pending merger. The charterholder’s firm has no restriction on the use of third-party research. The
charterholder is considering using the information to recommend the stock to clients. What is the most appropriate course of action
under the CFA Institute Standards of Professional Conduct?
A. Use the information only after verifying that the third-party firm obtained it legally and that no confidentiality agreement was breached
B. Refrain from using the information for any client recommendations until it becomes public knowledge
C. Use the information for client recommendations but disclose the source of the third-party research in the recommendation report
D. Trade on the information for the firm’s proprietary account first, then issue client recommendations
Correct Answer: B
Rationale: Standard II(A) Material Nonpublic Information prohibits acting on material nonpublic information regardless of the source. Even if the
third-party research was obtained without a confidentiality breach, the information remains material and nonpublic. The charterholder must wait until
the information is public before using it.
Q2. An investment manager is responsible for a large pension fund. The manager’s firm offers a soft-dollar program under which
brokerage commissions generate credits that can be used for research. The manager directs a significant portion of the fund’s
trades to a broker that provides excellent research but charges commissions 25% higher than the lowest available. The research is
used exclusively for the pension fund’s benefit. Has the manager most likely violated the Standards?
A. Yes, because the higher commissions reduce the fund’s net returns without a corresponding benefit that justifies the cost
B. No, because the research benefits the fund and soft-dollar arrangements are expressly permitted under the Standards
C. Yes, because soft-dollar arrangements are prohibited when the client is a pension fund with fiduciary obligations
D. No, provided the manager discloses the soft-dollar arrangement to the pension fund’s trustees annually
Correct Answer: A
Rationale: Standard III(A) Loyalty, Prudence, and Care requires managers to seek best execution. Paying substantially higher commissions solely
to generate soft-dollar credits, even if the research benefits the client, may violate the duty to minimize transaction costs unless the incremental
research value clearly exceeds the incremental cost. The Standards permit soft dollars only when the research assists in the investment
decision-making process and the client benefits.
Q3. A research analyst at a large firm is preparing a report on a biotechnology company. The analyst’s spouse owns a substantial
number of shares in the company that were purchased two years earlier. The analyst plans to issue a ‘buy’ recommendation. What
disclosure, if any, is required under the Standards?
A. The analyst must disclose the spouse’s ownership in the research report and any related public communications
B. No disclosure is required because the shares were acquired before the analyst began coverage of the company
C. Disclosure is required only if the spouse’s holdings exceed 1% of the company’s outstanding shares
D. The analyst must recuse from covering the company entirely because of the family relationship
Correct Answer: A
Rationale: Standard VI(A) Disclosure of Conflicts requires members to disclose all matters that could reasonably be expected to impair their
independence or objectivity. Beneficial ownership by a spouse is a conflict that must be disclosed in the research report. The timing of the purchase
does not eliminate the current conflict.
Q4. A portfolio manager learns that a client intends to make a large withdrawal from a mutual fund that the manager also
recommends to other clients. The manager immediately sells a portion of the fund shares held in other discretionary accounts to
avoid the anticipated dilution. Did the manager’s action most likely violate the Standards?
A. Yes, because the manager used material nonpublic information about the client’s intended withdrawal for the benefit of other clients
B. No, because the manager has a duty to protect the other clients from the adverse effects of the large redemption
C. Yes, because the manager failed to obtain the redeeming client’s consent before acting on the information
D. No, provided the sales in the other accounts were executed at the same net asset value as the large redemption
Correct Answer: A
Rationale: Information about a client’s intended large redemption is material nonpublic information under Standard II(A). Using that information to
trade ahead for other clients constitutes a violation. The duty of loyalty to one client does not permit the use of that client’s confidential information to
benefit others.
STUVIAACTUALEXAM | Page 2 of 40
,Q5. A CFA candidate is employed by a firm that has not adopted the CFA Institute Code and Standards. The candidate is asked by
a supervisor to write a research report that omits known negative information about a company in order to support an upcoming
underwriting. What is the candidate’s most appropriate action?
A. Refuse to write the report and, if necessary, dissociate from the activity, even if it means resigning
B. Write the report as instructed but include a disclaimer that the firm does not follow the CFA Institute Standards
C. Write the report omitting the negative information but document the omission in internal files for future reference
D. Write the report as instructed because the firm’s policies take precedence over the CFA Institute Standards for candidates
Correct Answer: A
Rationale: Standard I(A) Knowledge of the Law requires members and candidates to comply with the Code and Standards even when their firm
has not adopted them. Knowingly omitting material negative information violates Standard V(A) Diligence and Reasonable Basis and Standard I(C)
Misrepresentation. Dissociation is required when the activity cannot be corrected.
Q6. An investment firm claims compliance with the Global Investment Performance Standards (GIPS). The firm has a composite
that includes only fee-paying discretionary accounts. One of the accounts in the composite recently became non-discretionary
because the client imposed a restriction that the firm cannot implement. What is the firm’s most appropriate action regarding the
composite?
A. Remove the account from the composite prospectively and disclose the change in the firm’s GIPS report
B. Continue to include the account in the composite until the end of the calendar year, then remove it
C. Keep the account in the composite indefinitely because historical performance must not be altered
D. Create a new composite for non-discretionary accounts and move the account into that composite retroactively
Correct Answer: A
Rationale: Under GIPS, only fee-paying discretionary accounts may be included in composites. When an account becomes non-discretionary, it
must be removed from the composite on a prospective basis. Historical performance of the composite remains unchanged; the removal is disclosed
as appropriate.
Q7. A portfolio manager receives an unsolicited gift of premium tickets to a major sporting event from a brokerage firm that
executes a significant volume of the manager’s trades. The value of the tickets exceeds the firm’s nominal gift threshold. What is
the manager’s most appropriate action under the Standards?
A. Decline the gift or obtain written approval from the employer before accepting it
B. Accept the gift and disclose it to the employer after the event has occurred
C. Accept the gift because it was unsolicited and does not create a formal soft-dollar arrangement
D. Accept the gift and reduce the commissions paid to the brokerage firm by an equivalent amount
Correct Answer: A
Rationale: Standard I(B) Independence and Objectivity requires members to use reasonable care to avoid situations that could compromise
independence. Gifts above nominal value from service providers must be refused or accepted only with employer approval and proper disclosure.
Post-event disclosure does not satisfy the standard.
Q8. A research analyst issues a report recommending purchase of a stock. Shortly afterward, the analyst sells the same stock from
a personal account that had been held for more than six months. The firm’s policy permits personal trading after research reports
are distributed. Did the analyst most likely violate the Standards?
A. No, because the personal trade occurred after the research report was distributed and the holding period exceeded six months
B. Yes, because selling after a buy recommendation creates the appearance of a conflict regardless of firm policy
C. No, provided the analyst discloses the personal sale in a subsequent research update
D. Yes, unless the analyst obtains written consent from all clients who received the original recommendation
Correct Answer: A
Rationale: Standard VI(B) Priority of Transactions requires that clients and employers be given priority over personal trades. Once a
recommendation has been disseminated and a reasonable period has passed, personal trading is generally permitted if consistent with firm policy.
A six-month holding period further reduces any appearance of front-running.
STUVIAACTUALEXAM | Page 3 of 40
, Q9. A CFA charterholder serves on the board of a publicly traded company and also manages portfolios that hold the company’s
shares. The charterholder learns at a board meeting that the company will miss earnings expectations. The information has not yet
been made public. What is the charterholder’s most appropriate action with respect to the managed portfolios?
A. Continue to hold the shares and refrain from any trading until the information is publicly disclosed
B. Sell the shares from the managed portfolios immediately to protect clients from the anticipated price decline
C. Disclose the information to the firm’s compliance officer and seek permission to trade for clients
D. Place the shares on a restricted list and notify clients that no further transactions will be executed
Correct Answer: A
Rationale: Standard II(A) prohibits acting on material nonpublic information. Board service does not create an exception. The charterholder must
not trade for clients or personal accounts until the information is public. Placing the security on a restricted list is a prudent internal control but does
not authorize trading.
Q10. An investment adviser recommends a mutual fund to a client. The adviser will receive a higher commission for this fund than
for a comparable lower-cost fund that would also meet the client’s objectives. The adviser discloses the existence of the higher
commission but does not quantify the difference. Has the adviser most likely complied with the Standards?
A. No, because the disclosure is incomplete; the adviser must provide enough information for the client to evaluate the conflict
B. Yes, because any disclosure of the commission arrangement satisfies the duty of full and fair disclosure
C. No, because recommending a higher-commission fund when a lower-cost alternative exists is always a violation
D. Yes, provided the higher-commission fund has a superior historical return track record
Correct Answer: A
Rationale: Standard VI(A) requires full and fair disclosure of all conflicts. Merely stating that a higher commission exists, without quantifying or
explaining the magnitude relative to alternatives, does not give the client sufficient information to evaluate the conflict. The recommendation itself
may still be appropriate if the fund is suitable, but disclosure must be meaningful.
Q11. A firm’s marketing materials state that ‘all of our portfolio managers are CFA charterholders.’ In fact, two of the twelve
managers are Level III candidates who have not yet received their charters. The materials are distributed to prospective clients.
Which Standard is most directly violated?
A. Standard I(C) Misrepresentation
B. Standard III(D) Performance Presentation
C. Standard V(B) Communication with Clients and Prospective Clients
D. Standard VII(B) Reference to CFA Institute, the CFA Designation, and the CFA Program
Correct Answer: A
Rationale: Claiming that all portfolio managers are CFA charterholders when some are not is a misrepresentation of fact under Standard I(C).
Standard VII(B) addresses proper use of the CFA designation by individuals, but the primary violation here is the firm’s false statement about the
credentials of its staff.
Q12. A portfolio manager is asked by a client to vote proxy ballots in a manner that supports the client’s personal political
preferences rather than the economic interests of the portfolio. The manager’s firm has a proxy voting policy that prioritizes
economic value. What is the manager’s most appropriate response?
A. Follow the firm’s proxy voting policy and explain to the client that fiduciary duty requires voting in the economic interest of the portfolio
B. Vote according to the client’s political preferences because the client is the ultimate owner of the assets
C. Abstain from voting the proxies and document the client’s request for future reference
D. Seek a written waiver from the client relieving the manager of fiduciary responsibility for proxy voting
Correct Answer: A
Rationale: Standard III(A) Loyalty, Prudence, and Care requires that proxy voting be conducted in the best economic interest of the client. Political
preferences that conflict with economic value do not override this duty. The firm’s policy correctly prioritizes economic interests.
STUVIAACTUALEXAM | Page 4 of 40
CFA Level I Exam
A+
2026/2027 | CFA Institute | Professional
Certification with Questions & Verified Answers
2026/2027
Official Exam Style Review — Ethical & Professional Standards, Quantitative Methods, Economics, Financial Reporting &
Analysis, Corporate Finance, Equity Investments, Fixed Income, Derivatives, Alternative Investments, Portfolio Management
A+ QUESTIONS 6 SECTIONS 100%
VERIFIED FULL COVERAGE RATIONALES
CATEGORIES
■ Ethical & Professional Standards
■ Quantitative Methods & Economics
■ Financial Reporting & Analysis
■ Corporate Finance & Equity Investments
■ Fixed Income & Derivatives
■ Alternative Investments & Portfolio Management
STUVIAACTUALEXAM
, SECTION 1 — Ethical & Professional Standards
Q1. A CFA charterholder works for a brokerage firm and receives a research report from a third-party firm that contains material
nonpublic information about a pending merger. The charterholder’s firm has no restriction on the use of third-party research. The
charterholder is considering using the information to recommend the stock to clients. What is the most appropriate course of action
under the CFA Institute Standards of Professional Conduct?
A. Use the information only after verifying that the third-party firm obtained it legally and that no confidentiality agreement was breached
B. Refrain from using the information for any client recommendations until it becomes public knowledge
C. Use the information for client recommendations but disclose the source of the third-party research in the recommendation report
D. Trade on the information for the firm’s proprietary account first, then issue client recommendations
Correct Answer: B
Rationale: Standard II(A) Material Nonpublic Information prohibits acting on material nonpublic information regardless of the source. Even if the
third-party research was obtained without a confidentiality breach, the information remains material and nonpublic. The charterholder must wait until
the information is public before using it.
Q2. An investment manager is responsible for a large pension fund. The manager’s firm offers a soft-dollar program under which
brokerage commissions generate credits that can be used for research. The manager directs a significant portion of the fund’s
trades to a broker that provides excellent research but charges commissions 25% higher than the lowest available. The research is
used exclusively for the pension fund’s benefit. Has the manager most likely violated the Standards?
A. Yes, because the higher commissions reduce the fund’s net returns without a corresponding benefit that justifies the cost
B. No, because the research benefits the fund and soft-dollar arrangements are expressly permitted under the Standards
C. Yes, because soft-dollar arrangements are prohibited when the client is a pension fund with fiduciary obligations
D. No, provided the manager discloses the soft-dollar arrangement to the pension fund’s trustees annually
Correct Answer: A
Rationale: Standard III(A) Loyalty, Prudence, and Care requires managers to seek best execution. Paying substantially higher commissions solely
to generate soft-dollar credits, even if the research benefits the client, may violate the duty to minimize transaction costs unless the incremental
research value clearly exceeds the incremental cost. The Standards permit soft dollars only when the research assists in the investment
decision-making process and the client benefits.
Q3. A research analyst at a large firm is preparing a report on a biotechnology company. The analyst’s spouse owns a substantial
number of shares in the company that were purchased two years earlier. The analyst plans to issue a ‘buy’ recommendation. What
disclosure, if any, is required under the Standards?
A. The analyst must disclose the spouse’s ownership in the research report and any related public communications
B. No disclosure is required because the shares were acquired before the analyst began coverage of the company
C. Disclosure is required only if the spouse’s holdings exceed 1% of the company’s outstanding shares
D. The analyst must recuse from covering the company entirely because of the family relationship
Correct Answer: A
Rationale: Standard VI(A) Disclosure of Conflicts requires members to disclose all matters that could reasonably be expected to impair their
independence or objectivity. Beneficial ownership by a spouse is a conflict that must be disclosed in the research report. The timing of the purchase
does not eliminate the current conflict.
Q4. A portfolio manager learns that a client intends to make a large withdrawal from a mutual fund that the manager also
recommends to other clients. The manager immediately sells a portion of the fund shares held in other discretionary accounts to
avoid the anticipated dilution. Did the manager’s action most likely violate the Standards?
A. Yes, because the manager used material nonpublic information about the client’s intended withdrawal for the benefit of other clients
B. No, because the manager has a duty to protect the other clients from the adverse effects of the large redemption
C. Yes, because the manager failed to obtain the redeeming client’s consent before acting on the information
D. No, provided the sales in the other accounts were executed at the same net asset value as the large redemption
Correct Answer: A
Rationale: Information about a client’s intended large redemption is material nonpublic information under Standard II(A). Using that information to
trade ahead for other clients constitutes a violation. The duty of loyalty to one client does not permit the use of that client’s confidential information to
benefit others.
STUVIAACTUALEXAM | Page 2 of 40
,Q5. A CFA candidate is employed by a firm that has not adopted the CFA Institute Code and Standards. The candidate is asked by
a supervisor to write a research report that omits known negative information about a company in order to support an upcoming
underwriting. What is the candidate’s most appropriate action?
A. Refuse to write the report and, if necessary, dissociate from the activity, even if it means resigning
B. Write the report as instructed but include a disclaimer that the firm does not follow the CFA Institute Standards
C. Write the report omitting the negative information but document the omission in internal files for future reference
D. Write the report as instructed because the firm’s policies take precedence over the CFA Institute Standards for candidates
Correct Answer: A
Rationale: Standard I(A) Knowledge of the Law requires members and candidates to comply with the Code and Standards even when their firm
has not adopted them. Knowingly omitting material negative information violates Standard V(A) Diligence and Reasonable Basis and Standard I(C)
Misrepresentation. Dissociation is required when the activity cannot be corrected.
Q6. An investment firm claims compliance with the Global Investment Performance Standards (GIPS). The firm has a composite
that includes only fee-paying discretionary accounts. One of the accounts in the composite recently became non-discretionary
because the client imposed a restriction that the firm cannot implement. What is the firm’s most appropriate action regarding the
composite?
A. Remove the account from the composite prospectively and disclose the change in the firm’s GIPS report
B. Continue to include the account in the composite until the end of the calendar year, then remove it
C. Keep the account in the composite indefinitely because historical performance must not be altered
D. Create a new composite for non-discretionary accounts and move the account into that composite retroactively
Correct Answer: A
Rationale: Under GIPS, only fee-paying discretionary accounts may be included in composites. When an account becomes non-discretionary, it
must be removed from the composite on a prospective basis. Historical performance of the composite remains unchanged; the removal is disclosed
as appropriate.
Q7. A portfolio manager receives an unsolicited gift of premium tickets to a major sporting event from a brokerage firm that
executes a significant volume of the manager’s trades. The value of the tickets exceeds the firm’s nominal gift threshold. What is
the manager’s most appropriate action under the Standards?
A. Decline the gift or obtain written approval from the employer before accepting it
B. Accept the gift and disclose it to the employer after the event has occurred
C. Accept the gift because it was unsolicited and does not create a formal soft-dollar arrangement
D. Accept the gift and reduce the commissions paid to the brokerage firm by an equivalent amount
Correct Answer: A
Rationale: Standard I(B) Independence and Objectivity requires members to use reasonable care to avoid situations that could compromise
independence. Gifts above nominal value from service providers must be refused or accepted only with employer approval and proper disclosure.
Post-event disclosure does not satisfy the standard.
Q8. A research analyst issues a report recommending purchase of a stock. Shortly afterward, the analyst sells the same stock from
a personal account that had been held for more than six months. The firm’s policy permits personal trading after research reports
are distributed. Did the analyst most likely violate the Standards?
A. No, because the personal trade occurred after the research report was distributed and the holding period exceeded six months
B. Yes, because selling after a buy recommendation creates the appearance of a conflict regardless of firm policy
C. No, provided the analyst discloses the personal sale in a subsequent research update
D. Yes, unless the analyst obtains written consent from all clients who received the original recommendation
Correct Answer: A
Rationale: Standard VI(B) Priority of Transactions requires that clients and employers be given priority over personal trades. Once a
recommendation has been disseminated and a reasonable period has passed, personal trading is generally permitted if consistent with firm policy.
A six-month holding period further reduces any appearance of front-running.
STUVIAACTUALEXAM | Page 3 of 40
, Q9. A CFA charterholder serves on the board of a publicly traded company and also manages portfolios that hold the company’s
shares. The charterholder learns at a board meeting that the company will miss earnings expectations. The information has not yet
been made public. What is the charterholder’s most appropriate action with respect to the managed portfolios?
A. Continue to hold the shares and refrain from any trading until the information is publicly disclosed
B. Sell the shares from the managed portfolios immediately to protect clients from the anticipated price decline
C. Disclose the information to the firm’s compliance officer and seek permission to trade for clients
D. Place the shares on a restricted list and notify clients that no further transactions will be executed
Correct Answer: A
Rationale: Standard II(A) prohibits acting on material nonpublic information. Board service does not create an exception. The charterholder must
not trade for clients or personal accounts until the information is public. Placing the security on a restricted list is a prudent internal control but does
not authorize trading.
Q10. An investment adviser recommends a mutual fund to a client. The adviser will receive a higher commission for this fund than
for a comparable lower-cost fund that would also meet the client’s objectives. The adviser discloses the existence of the higher
commission but does not quantify the difference. Has the adviser most likely complied with the Standards?
A. No, because the disclosure is incomplete; the adviser must provide enough information for the client to evaluate the conflict
B. Yes, because any disclosure of the commission arrangement satisfies the duty of full and fair disclosure
C. No, because recommending a higher-commission fund when a lower-cost alternative exists is always a violation
D. Yes, provided the higher-commission fund has a superior historical return track record
Correct Answer: A
Rationale: Standard VI(A) requires full and fair disclosure of all conflicts. Merely stating that a higher commission exists, without quantifying or
explaining the magnitude relative to alternatives, does not give the client sufficient information to evaluate the conflict. The recommendation itself
may still be appropriate if the fund is suitable, but disclosure must be meaningful.
Q11. A firm’s marketing materials state that ‘all of our portfolio managers are CFA charterholders.’ In fact, two of the twelve
managers are Level III candidates who have not yet received their charters. The materials are distributed to prospective clients.
Which Standard is most directly violated?
A. Standard I(C) Misrepresentation
B. Standard III(D) Performance Presentation
C. Standard V(B) Communication with Clients and Prospective Clients
D. Standard VII(B) Reference to CFA Institute, the CFA Designation, and the CFA Program
Correct Answer: A
Rationale: Claiming that all portfolio managers are CFA charterholders when some are not is a misrepresentation of fact under Standard I(C).
Standard VII(B) addresses proper use of the CFA designation by individuals, but the primary violation here is the firm’s false statement about the
credentials of its staff.
Q12. A portfolio manager is asked by a client to vote proxy ballots in a manner that supports the client’s personal political
preferences rather than the economic interests of the portfolio. The manager’s firm has a proxy voting policy that prioritizes
economic value. What is the manager’s most appropriate response?
A. Follow the firm’s proxy voting policy and explain to the client that fiduciary duty requires voting in the economic interest of the portfolio
B. Vote according to the client’s political preferences because the client is the ultimate owner of the assets
C. Abstain from voting the proxies and document the client’s request for future reference
D. Seek a written waiver from the client relieving the manager of fiduciary responsibility for proxy voting
Correct Answer: A
Rationale: Standard III(A) Loyalty, Prudence, and Care requires that proxy voting be conducted in the best economic interest of the client. Political
preferences that conflict with economic value do not override this duty. The firm’s policy correctly prioritizes economic interests.
STUVIAACTUALEXAM | Page 4 of 40
