CFA Investment Foundations Practice Exam Questions &
Answers 2025 Top Taken Solution
According to fundamental ethical and professional principles applicable to the investment industry,
which group should have their interests ranked first?
A Clients
B Employers
C Co-workers - ANS ✔ - A Clients
The fundamental ethical principle to act with independence and objectivity is best upheld when:
A client confidentiality is maintained.
B personal education and professional development are undertaken.
C work and opinions are unaffected by any potential conflict of interest. - ANS ✔ - C work and opinions
are unaffected by any potential conflict of interest
According to fundamental ethical and professional principles for the investment industry, trading on
insider information on behalf of clients is:
A not allowed.
B allowed only if the trade benefits the client.
C allowed only if the trade is disclosed as a conflict of interest. - ANS ✔ - A not allowed
Which of the following is most likely a potential effect of unethical behaviour by people in the
investment industry?
A Increased employment
B Decreased economic output
C Decreased regulatory scrutiny - ANS ✔ - B Decreased economic output
Unethical behaviour by investment professionals may lead to higher:
A employment.
B long-term growth expectations for the economy.
, C cost of capital for those companies requiring capital. - ANS ✔ - C cost of capital for those companies
requiring capital
Which of the following most likely represents potential violation of ethical principles due to a conflict
of interest?
A An analyst writes a research report about a company for which he owns a significant number of
shares.
B A financial salesperson, who sells specific investment products, recommends an investment
product to a client and is paid a commission on the sale.
C An employee sells her own shares of a company after placing a client's order to sell shares of the
same company. - ANS ✔ - A an analyst writes a research report about a company for which he owns
a significant number of shares
The financial services industry benefits the economy by providing a link between providers of capital
and:
A. Savers
B. Lenders
C. Borrowers - ANS ✔ - C. Borrowers
The investment industry benefits the economy by:
A. Increasing risk
B. Decreasing liquidity
C. Increasing efficiency - ANS ✔ - C. Increasing efficiency
A major benefit of competition in financial markets for the individual investor is:
A. Risk transfer
B. Lower prices
C. Greater integrity - ANS ✔ - B. Lower prices
Which of the following would most likely assist individuals in defining their investment goals?
A. Dealers
B. Financial planners
Answers 2025 Top Taken Solution
According to fundamental ethical and professional principles applicable to the investment industry,
which group should have their interests ranked first?
A Clients
B Employers
C Co-workers - ANS ✔ - A Clients
The fundamental ethical principle to act with independence and objectivity is best upheld when:
A client confidentiality is maintained.
B personal education and professional development are undertaken.
C work and opinions are unaffected by any potential conflict of interest. - ANS ✔ - C work and opinions
are unaffected by any potential conflict of interest
According to fundamental ethical and professional principles for the investment industry, trading on
insider information on behalf of clients is:
A not allowed.
B allowed only if the trade benefits the client.
C allowed only if the trade is disclosed as a conflict of interest. - ANS ✔ - A not allowed
Which of the following is most likely a potential effect of unethical behaviour by people in the
investment industry?
A Increased employment
B Decreased economic output
C Decreased regulatory scrutiny - ANS ✔ - B Decreased economic output
Unethical behaviour by investment professionals may lead to higher:
A employment.
B long-term growth expectations for the economy.
, C cost of capital for those companies requiring capital. - ANS ✔ - C cost of capital for those companies
requiring capital
Which of the following most likely represents potential violation of ethical principles due to a conflict
of interest?
A An analyst writes a research report about a company for which he owns a significant number of
shares.
B A financial salesperson, who sells specific investment products, recommends an investment
product to a client and is paid a commission on the sale.
C An employee sells her own shares of a company after placing a client's order to sell shares of the
same company. - ANS ✔ - A an analyst writes a research report about a company for which he owns
a significant number of shares
The financial services industry benefits the economy by providing a link between providers of capital
and:
A. Savers
B. Lenders
C. Borrowers - ANS ✔ - C. Borrowers
The investment industry benefits the economy by:
A. Increasing risk
B. Decreasing liquidity
C. Increasing efficiency - ANS ✔ - C. Increasing efficiency
A major benefit of competition in financial markets for the individual investor is:
A. Risk transfer
B. Lower prices
C. Greater integrity - ANS ✔ - B. Lower prices
Which of the following would most likely assist individuals in defining their investment goals?
A. Dealers
B. Financial planners
