CAIA LEVEL 1 EXAM PREP 2026 SOLVED
QUESTIONS AND ANSWERS 100% CORRECT
◉ Professionalism. Answer: 1. Knowledge of the Law
2. Independence and Objectivity
3. Misrepresentation
4. Misconduct
◉ Knowledge of the Law. Answer: Members and Candidates must
understand and comply with all applicable laws, rules, and regulations
(including the CFA Institute Code of Ethics and Standards of
Professional Conduct) of any government, regulatory organization,
licensing agency, or professional association governing their
professional activities. In the event of conflict, Members and Candidates
must comply with the more strict law, rule, or regulation. Members and
Candidates must not knowingly participate or assist in and must
dissociate from any violation of such laws, rules, or regulations.
◉ Independence and Objectivity. Answer: Members and Candidates
must use reasonable care and judgment to achieve and maintain
independence and objectivity in their professional activities. Members
and Candidates must not offer, solicit, or accept any gift, benefit,
compensation, or consideration that reasonably could be expected to
compromise their own or another's independence and objectivity.
,◉ Misrepresentation. Answer: Members and Candidates must not
knowingly make any misrepresentations relating to investment analysis,
recommendations, actions, or other professional activities
◉ Misconduct. Answer: Members and Candidates must not engage in
any professional conduct involving dishonesty, fraud, or deceit or
commit any act that reflects adversely on their professional reputation,
integrity, or competence.
◉ Integrity of Capital Markets. Answer: 1. Material Nonpublic
Information
2. Market Manipulation
◉ Material Nonpublic Information. Answer: Members and Candidates
who possess material nonpublic information that could affect the value
of an investment must not act or cause others to act on the information.
◉ Market Manipulation. Answer: Members and Candidates must not
engage in practices that distort prices or artificially inflate trading
volume with the intent to mislead market participants.
◉ Duties to Clients. Answer: 1. Loyalty, Prudence and Care
2. Fair Dealing
3. Suitability
,4. Performance Presentation
5. Preservation of Confidentiality
◉ Loyalty, Prudence, and Care. Answer: Members and Candidates have
a duty of loyalty to their clients and must act with reasonable care and
exercise prudent judgment. Members and Candidates must act for the
benefit of their clients and place their clients' interests before their
employer's or their own interests.
◉ Fair Dealing. Answer: Members and Candidates must deal fairly and
objectively with all clients when providing investment analysis, making
investment recommendations, taking investment action, or engaging in
other professional activities.
◉ Suitability. Answer: 1. When Members and Candidates are in an
advisory relationship with a client, they must:
a. Make a reasonable inquiry into a client's or prospective client's
investment experience, risk and return objectives, and financial
constraints prior to making any investment recommendation or taking
investment action and must reassess and update this information
regularly.
b. Determine that an investment is suitable to the client's financial
situation and consistent with the client's written objectives, mandates,
, and constraints before making an investment recommendation or taking
investment action.
c. Judge the suitability of investments in the context of the client's total
portfolio.
2. When Members and Candidates are responsible for managing a
portfolio to a specific mandate, strategy, or style, they must make only
investment recommendations or take only investment actions that are
consistent with the stated objectives and constraints of the portfolio.
◉ Performance Presentation. Answer: When communicating investment
performance information, Members and Candidates must make
reasonable efforts to ensure that it is fair, accurate, and complete.
◉ Preservation of Confidentiality. Answer: Members and Candidates
must keep information about current, former, and prospective clients
confidential unless:
1. The information concerns illegal activities on the part of the client or
prospective client,
2. Disclosure is required by law, or
3. The client or prospective client permits disclosure of the information.
◉ Duties to Employers. Answer: 1. Loyalty
2. Additional Compensation Arrangements
QUESTIONS AND ANSWERS 100% CORRECT
◉ Professionalism. Answer: 1. Knowledge of the Law
2. Independence and Objectivity
3. Misrepresentation
4. Misconduct
◉ Knowledge of the Law. Answer: Members and Candidates must
understand and comply with all applicable laws, rules, and regulations
(including the CFA Institute Code of Ethics and Standards of
Professional Conduct) of any government, regulatory organization,
licensing agency, or professional association governing their
professional activities. In the event of conflict, Members and Candidates
must comply with the more strict law, rule, or regulation. Members and
Candidates must not knowingly participate or assist in and must
dissociate from any violation of such laws, rules, or regulations.
◉ Independence and Objectivity. Answer: Members and Candidates
must use reasonable care and judgment to achieve and maintain
independence and objectivity in their professional activities. Members
and Candidates must not offer, solicit, or accept any gift, benefit,
compensation, or consideration that reasonably could be expected to
compromise their own or another's independence and objectivity.
,◉ Misrepresentation. Answer: Members and Candidates must not
knowingly make any misrepresentations relating to investment analysis,
recommendations, actions, or other professional activities
◉ Misconduct. Answer: Members and Candidates must not engage in
any professional conduct involving dishonesty, fraud, or deceit or
commit any act that reflects adversely on their professional reputation,
integrity, or competence.
◉ Integrity of Capital Markets. Answer: 1. Material Nonpublic
Information
2. Market Manipulation
◉ Material Nonpublic Information. Answer: Members and Candidates
who possess material nonpublic information that could affect the value
of an investment must not act or cause others to act on the information.
◉ Market Manipulation. Answer: Members and Candidates must not
engage in practices that distort prices or artificially inflate trading
volume with the intent to mislead market participants.
◉ Duties to Clients. Answer: 1. Loyalty, Prudence and Care
2. Fair Dealing
3. Suitability
,4. Performance Presentation
5. Preservation of Confidentiality
◉ Loyalty, Prudence, and Care. Answer: Members and Candidates have
a duty of loyalty to their clients and must act with reasonable care and
exercise prudent judgment. Members and Candidates must act for the
benefit of their clients and place their clients' interests before their
employer's or their own interests.
◉ Fair Dealing. Answer: Members and Candidates must deal fairly and
objectively with all clients when providing investment analysis, making
investment recommendations, taking investment action, or engaging in
other professional activities.
◉ Suitability. Answer: 1. When Members and Candidates are in an
advisory relationship with a client, they must:
a. Make a reasonable inquiry into a client's or prospective client's
investment experience, risk and return objectives, and financial
constraints prior to making any investment recommendation or taking
investment action and must reassess and update this information
regularly.
b. Determine that an investment is suitable to the client's financial
situation and consistent with the client's written objectives, mandates,
, and constraints before making an investment recommendation or taking
investment action.
c. Judge the suitability of investments in the context of the client's total
portfolio.
2. When Members and Candidates are responsible for managing a
portfolio to a specific mandate, strategy, or style, they must make only
investment recommendations or take only investment actions that are
consistent with the stated objectives and constraints of the portfolio.
◉ Performance Presentation. Answer: When communicating investment
performance information, Members and Candidates must make
reasonable efforts to ensure that it is fair, accurate, and complete.
◉ Preservation of Confidentiality. Answer: Members and Candidates
must keep information about current, former, and prospective clients
confidential unless:
1. The information concerns illegal activities on the part of the client or
prospective client,
2. Disclosure is required by law, or
3. The client or prospective client permits disclosure of the information.
◉ Duties to Employers. Answer: 1. Loyalty
2. Additional Compensation Arrangements
