CFA ESG - Mock Exam Questions With Verified
Answers
Which of the following investment approaches is most likely to be at risk of short-
termism?
A.) ESG Investing
B.) Impact Investing
C. Conventional Investing -
/.Which of the following types of responsible investments is focused on the bottom of
the pyramid (BOP)?
A.) Green bonds
B.) Microfinance bonds
C.) Funds investing in smart grid technology
/.According to the Stockholm Resilience Centre, the two core boundaries of the nine
planetary boundaries are:
A.) Biosphere integrity and climate change
B.) Climate change and land-system change
C.) Biosphere integrity and land system change
/.ESG integration can have a material financial impact on a company leading to:
A.) Reduced risk of fines
B.) Increased negative externalities
C.) Increased risk of state intervention
/.Which of the following statements regarding externalities is most accurate?
A.) Externalities occur due to environmental or social factors.
B.) When externalities are positive, private costs are lower than societal costs.
C.) Internalization of externalities improves companies' financial performance
/.In addition to the payment of dues and reporting annually on their responsible
investment practices, which of the following is a minimum requirement for signatories to
the Principles of Responsible Investment (PRI)? Members must:
A.) be active owners in the companies in which they are invested
B.) seek appropriate disclosure on ESG issues by the investee companies.
C.) have senior-level commitment for responsible investment implementation.
,/.Which of the following organizations developed the Model Mandate Initiative?
A.) Principles for Responsible Investment (PRI)
B.) International Corporate Governance Network (IGN)
C.) University of Cambridge Institute for Sustainability Leadership
/.Which of the following statements is most accurate? The majority of studies suggest
that:
A.) a company with high ESG standards increases its cost of capital.
B.) ESG performance and investment fund performance are positively correlated
C.) ESG performance and corporate financial performance are positively
correlated. -
/.Greenwashing most likely refers to:
A.) countries exporting hazardous waste to other countries.
B.) companies making misleading claims about their environmental practices.
C.) companies introducing substances into the environment that are harmful.
/.The standard for the UN Global Compact is overseen by the:
A.) Global Reporting Initiative (GRI).
B.) Value Reporting Foundation (VRF).
C.) International Business Council (IBC).
/.Which of the following requires investors to act with a more long-term focus?
A.) Stockholm Resilience Centre
B.) Financial Stability Board (FSB).
C.) UN Shareholder Rights Directive (SRD)
/.Which of the following types of responsible investing is not related to portfolio
construction.
A.) Thematic investing
B.) Shareholder engagement
C.) Socially responsible investing (SRI) -
/.Which of the following responsible investment approaches most likely incorporates
positive screening?
A.) Faith-based investment
B.) Values-driven investment
C.) Best-in-class investment
,/.Double materiality is best described as:
A.) an extension of financial materiality that considers the impacts of a company on the
climate or any other ESG factor.
B.) an accounting framework with three parts: social, environmental or ecolog-ical), and
financial (people, planet, and profit).
C.) investments made with the specific intent of generating positive, measurable social
and environmental impact alongside a financial return.
/.Universal owners are best described as:
A.) large institutional investors that have diversified holdings
B.) retail investors that diversify through index funds or ETFs.
C.) stakeholders impacted by externalized environmental and social costs.
/.Which of the following statements about the internalization of externalities is most
accurate?
A.) Internalization of negative externalities can be achieved only by regulatory means.
B.) Internalization through taxation is an innovative, new idea to address exter-nalized
pollution
C.) Internalization refers to all measures to ensure externalities are reflected in the
prices of commercial goods and services.
/.The Shareholder Rights Directive (SRD) is a regulatory initiative to:
A.) counter short-termism
B.) reduce the use of proxies by managers
C.) protect minority shareholders interests
/.The Freshfields report was seminal in understanding that:
A.) corporate profits are materially at risk from state intervention.
B.) ESG issues are relevant for financial valuation and fiduciary duty.
c. humanity's ability to thrive is contingent on respecting planetary boundaries. -
/.The proportion of Fortune Global 500 companies headquartered in emerging markets
is expected to:
A.) Decrease
B.) Remain Approximately the Same
C.) Increase -
/.Which of the following statements about population is most accurate?
A.) China's labor force has already peaked
B.) The global population is getting younger.
, C.) The world's population is expected to shrink by 2030. -
/.Investors demonstrate short-termism by:
A.) Engaging with investee companies to maximize long term value
B.) Encouraging the development of a long-term ESG implementation plan
C.) Trading based on short-term price movements rather than long-term value
/.Which of the following is not an example of a social factor?
A.) Biodiversity
B.) Labor standards
C.) Health and Safety
/.ESG considerations are difficult to value precisely and difficult to time because ESG
data:
A.) are not always available.
B.) can only be measured quantitatively.
C.) have no impact on financial statements.
/.Institutional investors generate sustainable returns from their investments by:
A.) not engaging actively with companies on ESG matters.
B.) disclosing their corporate social responsibility activities.
C.) integrating ESG factors into their portfolio construction decisions.
/.What are the four broad groupings of issues covered by the UN Global Compact?
A.) Environmental, social, governance, and impact
B.) Poverty, diversity, sustainability, and transparency
C.) Human rights, labor, environment, and anti-corruption
/.Which of the following is not one of the three Ps in the triple bottom line concept?
A.) People
B.) Planet
C.) Principles
/.Best-in-class investment:
A.) uses negative screening to exclude companies
B.) refers to selecting companies that fall under a sustainability-related theme.
C.) involves selecting only the companies that overcome a defined ranking hurdle -
Answers
Which of the following investment approaches is most likely to be at risk of short-
termism?
A.) ESG Investing
B.) Impact Investing
C. Conventional Investing -
/.Which of the following types of responsible investments is focused on the bottom of
the pyramid (BOP)?
A.) Green bonds
B.) Microfinance bonds
C.) Funds investing in smart grid technology
/.According to the Stockholm Resilience Centre, the two core boundaries of the nine
planetary boundaries are:
A.) Biosphere integrity and climate change
B.) Climate change and land-system change
C.) Biosphere integrity and land system change
/.ESG integration can have a material financial impact on a company leading to:
A.) Reduced risk of fines
B.) Increased negative externalities
C.) Increased risk of state intervention
/.Which of the following statements regarding externalities is most accurate?
A.) Externalities occur due to environmental or social factors.
B.) When externalities are positive, private costs are lower than societal costs.
C.) Internalization of externalities improves companies' financial performance
/.In addition to the payment of dues and reporting annually on their responsible
investment practices, which of the following is a minimum requirement for signatories to
the Principles of Responsible Investment (PRI)? Members must:
A.) be active owners in the companies in which they are invested
B.) seek appropriate disclosure on ESG issues by the investee companies.
C.) have senior-level commitment for responsible investment implementation.
,/.Which of the following organizations developed the Model Mandate Initiative?
A.) Principles for Responsible Investment (PRI)
B.) International Corporate Governance Network (IGN)
C.) University of Cambridge Institute for Sustainability Leadership
/.Which of the following statements is most accurate? The majority of studies suggest
that:
A.) a company with high ESG standards increases its cost of capital.
B.) ESG performance and investment fund performance are positively correlated
C.) ESG performance and corporate financial performance are positively
correlated. -
/.Greenwashing most likely refers to:
A.) countries exporting hazardous waste to other countries.
B.) companies making misleading claims about their environmental practices.
C.) companies introducing substances into the environment that are harmful.
/.The standard for the UN Global Compact is overseen by the:
A.) Global Reporting Initiative (GRI).
B.) Value Reporting Foundation (VRF).
C.) International Business Council (IBC).
/.Which of the following requires investors to act with a more long-term focus?
A.) Stockholm Resilience Centre
B.) Financial Stability Board (FSB).
C.) UN Shareholder Rights Directive (SRD)
/.Which of the following types of responsible investing is not related to portfolio
construction.
A.) Thematic investing
B.) Shareholder engagement
C.) Socially responsible investing (SRI) -
/.Which of the following responsible investment approaches most likely incorporates
positive screening?
A.) Faith-based investment
B.) Values-driven investment
C.) Best-in-class investment
,/.Double materiality is best described as:
A.) an extension of financial materiality that considers the impacts of a company on the
climate or any other ESG factor.
B.) an accounting framework with three parts: social, environmental or ecolog-ical), and
financial (people, planet, and profit).
C.) investments made with the specific intent of generating positive, measurable social
and environmental impact alongside a financial return.
/.Universal owners are best described as:
A.) large institutional investors that have diversified holdings
B.) retail investors that diversify through index funds or ETFs.
C.) stakeholders impacted by externalized environmental and social costs.
/.Which of the following statements about the internalization of externalities is most
accurate?
A.) Internalization of negative externalities can be achieved only by regulatory means.
B.) Internalization through taxation is an innovative, new idea to address exter-nalized
pollution
C.) Internalization refers to all measures to ensure externalities are reflected in the
prices of commercial goods and services.
/.The Shareholder Rights Directive (SRD) is a regulatory initiative to:
A.) counter short-termism
B.) reduce the use of proxies by managers
C.) protect minority shareholders interests
/.The Freshfields report was seminal in understanding that:
A.) corporate profits are materially at risk from state intervention.
B.) ESG issues are relevant for financial valuation and fiduciary duty.
c. humanity's ability to thrive is contingent on respecting planetary boundaries. -
/.The proportion of Fortune Global 500 companies headquartered in emerging markets
is expected to:
A.) Decrease
B.) Remain Approximately the Same
C.) Increase -
/.Which of the following statements about population is most accurate?
A.) China's labor force has already peaked
B.) The global population is getting younger.
, C.) The world's population is expected to shrink by 2030. -
/.Investors demonstrate short-termism by:
A.) Engaging with investee companies to maximize long term value
B.) Encouraging the development of a long-term ESG implementation plan
C.) Trading based on short-term price movements rather than long-term value
/.Which of the following is not an example of a social factor?
A.) Biodiversity
B.) Labor standards
C.) Health and Safety
/.ESG considerations are difficult to value precisely and difficult to time because ESG
data:
A.) are not always available.
B.) can only be measured quantitatively.
C.) have no impact on financial statements.
/.Institutional investors generate sustainable returns from their investments by:
A.) not engaging actively with companies on ESG matters.
B.) disclosing their corporate social responsibility activities.
C.) integrating ESG factors into their portfolio construction decisions.
/.What are the four broad groupings of issues covered by the UN Global Compact?
A.) Environmental, social, governance, and impact
B.) Poverty, diversity, sustainability, and transparency
C.) Human rights, labor, environment, and anti-corruption
/.Which of the following is not one of the three Ps in the triple bottom line concept?
A.) People
B.) Planet
C.) Principles
/.Best-in-class investment:
A.) uses negative screening to exclude companies
B.) refers to selecting companies that fall under a sustainability-related theme.
C.) involves selecting only the companies that overcome a defined ranking hurdle -
