FSA EXAM PART 2 QUESTIONS AND
ANSWERS
An analyst wants to understand the connection between a company's sustainability data
and one of four financial drivers (revenue, cost, assets and liabilities, and cost of capital)
that are relevant to a discounted cash flow (DCF) analysis. Choose the pairing that
correctly matches a data type with its relevance to a DCF analysis. - Answer- B. Data
about regulatory compliance : operational performance and cost structure
Completeness is an important concept in disclosures of material information. For a
company in an industry where workplace safety is likely to be material, if a company
with 0 fatalities but 1,000 near-misses only discloses the number of fatal accidents, then
investors are missing the complete picture. In the Automobile industry, information
about the safety of a company's car models is likely to be material. Which three metrics,
when taken together, are most likely to represent a complete disclosure? (Choose
three) - Answer- B. Number of safety-related defect complaints
C. Number of vehicles recalled
F. Percentage of vehicles with 5-star safety rating
On the spectrum of "values-" to "value"-focused investing, which investment strategy
that uses sustainability information is farthest on the "value" end? - Answer- C. ESG
Integration
Which two statements, if true, provide evidence that the potential disclosure topic of
Labor Practices fails to meet the criteria for inclusion in the Oil & Gas - Services
Standard? (Choose two) - Answer- B. "The industry is not unionized and strikes are a
rare occurrence within the industry. Workers are generally extremely well paid and labor
practices are healthy for the most part."
C. "There are instances where labor practices is material in a specific set of
circumstances— such as in Gabon in 2013—but it is not material across the industry."
CASE STUDY 1 - HOTELS & LODGING INDUSTRY
If an analyst determines that Company A is less likely than Company B to face material
impacts from environmental and climate risks, what piece of information would likely
lead to that conclusion? - Answer- A. The percent of revenue from coastal regions
CASE STUDY 1 - HOTELS & LODGING INDUSTRY
An analyst comparing the two companies' management of water use found that, on a
normalized basis, Company A was actually outperforming Company B. Which
normalization did the analyst use? - Answer- D. The amount of energy needed to
generate $1 of revenue
ANSWERS
An analyst wants to understand the connection between a company's sustainability data
and one of four financial drivers (revenue, cost, assets and liabilities, and cost of capital)
that are relevant to a discounted cash flow (DCF) analysis. Choose the pairing that
correctly matches a data type with its relevance to a DCF analysis. - Answer- B. Data
about regulatory compliance : operational performance and cost structure
Completeness is an important concept in disclosures of material information. For a
company in an industry where workplace safety is likely to be material, if a company
with 0 fatalities but 1,000 near-misses only discloses the number of fatal accidents, then
investors are missing the complete picture. In the Automobile industry, information
about the safety of a company's car models is likely to be material. Which three metrics,
when taken together, are most likely to represent a complete disclosure? (Choose
three) - Answer- B. Number of safety-related defect complaints
C. Number of vehicles recalled
F. Percentage of vehicles with 5-star safety rating
On the spectrum of "values-" to "value"-focused investing, which investment strategy
that uses sustainability information is farthest on the "value" end? - Answer- C. ESG
Integration
Which two statements, if true, provide evidence that the potential disclosure topic of
Labor Practices fails to meet the criteria for inclusion in the Oil & Gas - Services
Standard? (Choose two) - Answer- B. "The industry is not unionized and strikes are a
rare occurrence within the industry. Workers are generally extremely well paid and labor
practices are healthy for the most part."
C. "There are instances where labor practices is material in a specific set of
circumstances— such as in Gabon in 2013—but it is not material across the industry."
CASE STUDY 1 - HOTELS & LODGING INDUSTRY
If an analyst determines that Company A is less likely than Company B to face material
impacts from environmental and climate risks, what piece of information would likely
lead to that conclusion? - Answer- A. The percent of revenue from coastal regions
CASE STUDY 1 - HOTELS & LODGING INDUSTRY
An analyst comparing the two companies' management of water use found that, on a
normalized basis, Company A was actually outperforming Company B. Which
normalization did the analyst use? - Answer- D. The amount of energy needed to
generate $1 of revenue
