,2010 Level I Mock Exam: Morning Session
The morning session of the 2010 Level I Chartered Financial Analyst ® Mock
Examination has 120 questions. To best simulate the exam day experience, candidates
are advised to allocate an average of 1.5 minutes per question for a total of 180 minutes
(3 hours) for this session of the exam.
Questions Topic Minutes
1-18 Ethical and Professional Standards 27
19-32 Quantitative Methods 21
33-44 Economics 18
45-68 Financial Statement Analysis 36
69-78 Corporate Finance 15
79-90 Equity Investments 18
91-96 Derivative Investments 9
97-108 Fixed Income Investments 18
109-114 Alternative Investments 9
115-120 Portfolio Management 9
Total: 180
,Questions 1 through 18 relate to Ethical and Professional Standards.
1. According to the CFA Institute Code of Ethics and Standards of Professional
Conduct, trading on material nonpublic information is least likely to be prevented
by establishing:
A. fire-walls.
B. watch lists.
C. selective disclosure.
2. William Wong, CFA, is an equity analyst with Hayswick Securities. Based on his
fundamental analysis, Wong concludes the stock of a company he follows,
Nolvec Inc., is substantially undervalued and will experience a large price
increase. He delays revising his recommendation on the stock from “hold” to
“buy” to allow his brother to buy shares at a lower price. Wong is least likely to
have violated the CFA Institute Standards of Professional Conduct related to:
A. duty to clients.
B. reasonable basis.
C. priority of transactions.
3. During an onsite company visit, Marsha Ward, CFA, accidentally overheard the
Chief Executive Officer (CEO) of Stargazer, Inc. discussing the company’s tender
offer to purchase Dynamica Enterprises, a retailer of Stargazer products.
According to the CFA Institute Standards of Professional Conduct, Ward most
likely can not use the information because:
A. it relates to a tender offer.
B. it was overheard and might be considered unreliable.
C. she does not have a reasonable and adequate basis for taking investment
action.
, 4. Ian O’Sullivan, CFA, is the owner and sole employee of two companies, a public
relations firm and a financial research firm. The public relations firm entered into
a contract with Mallory Enterprises to provide public relations services, with
O’Sullivan receiving 40,000 shares of Mallory stock in payment for his services.
Over the next 10 days, the public relations firm issued several press releases that
discussed Mallory’s excellent growth prospects. O’Sullivan, through his financial
research firm, also published a research report recommending Mallory stock as a
“buy.” According to the CFA Institute Standards of Professional Conduct,
O’Sullivan is most likely required to disclose his ownership of Mallory stock in
the:
A. press releases only.
B. research report only.
C. both the press release and the research report.
5. Jefferson Piedmont, CFA, a portfolio manager for Park Investments, plans to
manage the portfolios of several family members in exchange for a percentage of
each portfolio’s profits. As his family members have extensive portfolios
requiring substantial attention, they have requested that Piedmont provide the
services outside his employment with Park. Piedmont notifies his employer in
writing of his prospective outside employment. Two weeks later, Piedmont
begins managing the family members’ portfolios. By managing these portfolios,
did Piedmont violate any CFA Institute Standards of Professional Conduct?
A. Conflicts of Interest
B. Additional Compensation.
C. Both Additional Compensation and Conflicts of Interest.
6. The eight major provisions of the Global Investment Performance Standards
(GIPS) include all of the following except:
A. Input Data, Calculation Methodology, and Real Estate.
B. Fundamentals of Compliance, Composite Construction, and Disclosures.
C. Calculation Methodology, Composite Construction, and Alternative Assets.
The morning session of the 2010 Level I Chartered Financial Analyst ® Mock
Examination has 120 questions. To best simulate the exam day experience, candidates
are advised to allocate an average of 1.5 minutes per question for a total of 180 minutes
(3 hours) for this session of the exam.
Questions Topic Minutes
1-18 Ethical and Professional Standards 27
19-32 Quantitative Methods 21
33-44 Economics 18
45-68 Financial Statement Analysis 36
69-78 Corporate Finance 15
79-90 Equity Investments 18
91-96 Derivative Investments 9
97-108 Fixed Income Investments 18
109-114 Alternative Investments 9
115-120 Portfolio Management 9
Total: 180
,Questions 1 through 18 relate to Ethical and Professional Standards.
1. According to the CFA Institute Code of Ethics and Standards of Professional
Conduct, trading on material nonpublic information is least likely to be prevented
by establishing:
A. fire-walls.
B. watch lists.
C. selective disclosure.
2. William Wong, CFA, is an equity analyst with Hayswick Securities. Based on his
fundamental analysis, Wong concludes the stock of a company he follows,
Nolvec Inc., is substantially undervalued and will experience a large price
increase. He delays revising his recommendation on the stock from “hold” to
“buy” to allow his brother to buy shares at a lower price. Wong is least likely to
have violated the CFA Institute Standards of Professional Conduct related to:
A. duty to clients.
B. reasonable basis.
C. priority of transactions.
3. During an onsite company visit, Marsha Ward, CFA, accidentally overheard the
Chief Executive Officer (CEO) of Stargazer, Inc. discussing the company’s tender
offer to purchase Dynamica Enterprises, a retailer of Stargazer products.
According to the CFA Institute Standards of Professional Conduct, Ward most
likely can not use the information because:
A. it relates to a tender offer.
B. it was overheard and might be considered unreliable.
C. she does not have a reasonable and adequate basis for taking investment
action.
, 4. Ian O’Sullivan, CFA, is the owner and sole employee of two companies, a public
relations firm and a financial research firm. The public relations firm entered into
a contract with Mallory Enterprises to provide public relations services, with
O’Sullivan receiving 40,000 shares of Mallory stock in payment for his services.
Over the next 10 days, the public relations firm issued several press releases that
discussed Mallory’s excellent growth prospects. O’Sullivan, through his financial
research firm, also published a research report recommending Mallory stock as a
“buy.” According to the CFA Institute Standards of Professional Conduct,
O’Sullivan is most likely required to disclose his ownership of Mallory stock in
the:
A. press releases only.
B. research report only.
C. both the press release and the research report.
5. Jefferson Piedmont, CFA, a portfolio manager for Park Investments, plans to
manage the portfolios of several family members in exchange for a percentage of
each portfolio’s profits. As his family members have extensive portfolios
requiring substantial attention, they have requested that Piedmont provide the
services outside his employment with Park. Piedmont notifies his employer in
writing of his prospective outside employment. Two weeks later, Piedmont
begins managing the family members’ portfolios. By managing these portfolios,
did Piedmont violate any CFA Institute Standards of Professional Conduct?
A. Conflicts of Interest
B. Additional Compensation.
C. Both Additional Compensation and Conflicts of Interest.
6. The eight major provisions of the Global Investment Performance Standards
(GIPS) include all of the following except:
A. Input Data, Calculation Methodology, and Real Estate.
B. Fundamentals of Compliance, Composite Construction, and Disclosures.
C. Calculation Methodology, Composite Construction, and Alternative Assets.
