CFA 2026 Mock Exam A Session 1 |
Complete Set of Questions, Answers &
Rationales
Question 1
Peter Levinson, CFA, declared personal bankruptcy due to unpaid medical bills. After
losing his receipt for a business dinner, he uses his wife's receipt for a smaller amount
from the same restaurant to submit his expense claim. Has Levinson most likely violated
the Standards?
A. No
B. Yes, by declaring personal bankruptcy
C. Yes, by using his wife's receipt for his expense claim
Correct Answer: C
Rationale: According to Standard I(D) (Misconduct), 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.
Using his wife's receipt for an expense claim is dishonest professional conduct.
Question 2
A member has been asked by her supervisor to write a research report on a company.
The member's firm owns options to buy the company's stock. The member's firm does
not possess material nonpublic information on the company. According to the
Standards, the member should:
A. Outsource the report to an approved third-party research provider
B. Place the stock on a restricted list and provide only factual information about the
company
C. Disclose in the research report the amount and the expiration date of the options held
by her firm in the covered company
Correct Answer: C
Rationale: According to Standard VI(A) (Disclosure of Conflicts), if a member's firm
has outstanding options to buy stock as part of compensation for corporate financing
activities, the amount and expiration date of these options should be disclosed as a
footnote to any research report published.
Page | 1
,Question 3
Simon Jensen, CFA, a portfolio manager, participates in an IPO of PT Tech. Jensen
prorates the oversubscribed issue on an odd-lot basis to suitable clients. After the
successful IPO, his colleague Todd Durkny, a CFA candidate, initiates coverage of PT
Tech and sends her "buy" recommendation to all clients by email. She then calls her
premium fee-paying clients to discuss PT Tech in-depth. Whose actions are consistent
with the Standards?
A. Durkny's only
B. Jensen's only
C. Both Durkny's and Jensen's
Correct Answer: A
Rationale: According to Standard III(B) (Fair Dealing), members and candidates may
provide more personal, specialized, or in-depth service to clients who are willing to pay
for premium services through higher management fees or higher levels of brokerage.
Question 4
According to the recommended procedures for compliance with the Standard relating to
performance presentation, members should:
A. Exclude terminated accounts from performance history
B. Consider the knowledge of the audience to whom a performance presentation is
addressed
C. Use a representative account when presenting the performance of the weighted
composite of similar portfolios
Correct Answer: B
Rationale: According to Standard III(D) (Performance Presentation), members can
meet the obligation of the Standard by considering the knowledge and sophistication of
the audience to whom a performance presentation is addressed.
Question 5
Gurdgep Singh, CFA, is an analyst with a hedge fund and works closely with his
supervisor, Joan Tanner, who earned her CFA designation 20 years ago. Singh becomes
aware that Tanner uses her CFA designation even though she no longer pays her
membership dues. Tanner uses the designation during several meetings that she and
Singh have with the firm's clients and emphasizes that all her team members, including
herself, are CFA charterholders. Has Singh violated the Standards?
A. No
B. Yes, the Standard relating to knowledge of the law
Page | 2
,C. Yes, the Standard relating to reference to CFA Institute, the CFA designation, and the
CFA program
Correct Answer: B
Rationale: According to Standard I(A) (Knowledge of the Law), members must not
knowingly participate or assist in violations and must dissociate from such violations.
By staying silent when false information is being given to clients, Singh is seen as
assisting in that misconduct.
Question 6
John McCay, CFA, is an analyst who has prepared a report on the cable industry based
on research from a variety of sources and analysts. He compiles these findings to form
his own opinion and distributes the report to clients without acknowledging his sources.
McCay has violated the Standards by:
A. Failing to cite the work of others
B. Failing to have a reasonable basis for his conclusions
C. Incorporating other analysts' research into his own work
Correct Answer: A
Rationale: According to Standard I(C) (Misrepresentation), one of the most egregious
practices is the preparation of research reports based on multiple sources of information
without acknowledging the sources. McCay violated this Standard by failing to cite the
work of others.
Question 7
Gardner Knight, CFA, is a product development specialist at an investment bank. Knight
is responsible for creating and marketing collateralized debt obligations (CDOs)
consisting of residential mortgage bonds. In the marketing brochure for his most recent
CDO, Knight provided a list of the mortgage bonds from which the CDO was created.
The brochure also states "an independent third party, the collateral manager, has sole
authority for the selection of all mortgage bonds used as collateral in the CDO."
However, Knight met with the collateral manager and contributed to determining the
bonds included in the CDO. Knight is least likely to be in violation of which of the
following Standards?
A. Suitability
B. Disclosure of Conflicts
C. Communication with Clients and Prospective Clients
Page | 3
, Correct Answer: A
Rationale: There is no indication that the investment is unsuitable for investors, so
there is no violation of Standard III(C) (Suitability).
Question 8
Meera Doka, CFA, manages an equity fund for clients. One day, the fund experiences a
large loss due to an event unforeseen by all market participants. Prior to the event, Doka
failed to disclose the risk of this event occurring to her clients. One month later, Doka
decides to outsource 5% of the fund's assets to an external manager. She does not
inform her clients of this change because the external manager follows an investment
process that is very similar to her fund's process. Are Doka's actions consistent with the
Standard relating to communication with clients and prospective clients?
A. Yes
B. No, because she failed to disclose the risk that resulted in the large loss
C. No, because she failed to inform her clients about outsourcing 5% of the fund's assets
Correct Answer: C
Rationale: According to Standard V(B) (Communications with Clients and Prospective
Clients), members should inform clients about the use of an outside manager to allow
clients to understand the full mix of products and strategies being applied.
Question 9
According to the Standards, if a member cannot discharge supervisory responsibilities
due to an inadequate compliance system, the member is:
A. Only required to decline in writing to accept supervisory responsibility
B. Only required to report the inadequate compliance system to CFA Institute
C. Both required to decline in writing to accept supervisory responsibility and to report
the inadequate compliance system to CFA Institute
Correct Answer: A
Rationale: According to Standard IV(C) (Responsibilities of Supervisors), if a member
cannot discharge supervisory responsibilities due to an inadequate compliance system,
the member should decline in writing to accept supervisory responsibility. There is no
requirement to report the inadequate compliance system to CFA Institute.
Question 10
A 12-year-old investment firm adopts the GIPS standards. To claim compliance with the
GIPS standards, the firm is initially required to present GIPS-compliant performance
history:
Page | 4
Complete Set of Questions, Answers &
Rationales
Question 1
Peter Levinson, CFA, declared personal bankruptcy due to unpaid medical bills. After
losing his receipt for a business dinner, he uses his wife's receipt for a smaller amount
from the same restaurant to submit his expense claim. Has Levinson most likely violated
the Standards?
A. No
B. Yes, by declaring personal bankruptcy
C. Yes, by using his wife's receipt for his expense claim
Correct Answer: C
Rationale: According to Standard I(D) (Misconduct), 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.
Using his wife's receipt for an expense claim is dishonest professional conduct.
Question 2
A member has been asked by her supervisor to write a research report on a company.
The member's firm owns options to buy the company's stock. The member's firm does
not possess material nonpublic information on the company. According to the
Standards, the member should:
A. Outsource the report to an approved third-party research provider
B. Place the stock on a restricted list and provide only factual information about the
company
C. Disclose in the research report the amount and the expiration date of the options held
by her firm in the covered company
Correct Answer: C
Rationale: According to Standard VI(A) (Disclosure of Conflicts), if a member's firm
has outstanding options to buy stock as part of compensation for corporate financing
activities, the amount and expiration date of these options should be disclosed as a
footnote to any research report published.
Page | 1
,Question 3
Simon Jensen, CFA, a portfolio manager, participates in an IPO of PT Tech. Jensen
prorates the oversubscribed issue on an odd-lot basis to suitable clients. After the
successful IPO, his colleague Todd Durkny, a CFA candidate, initiates coverage of PT
Tech and sends her "buy" recommendation to all clients by email. She then calls her
premium fee-paying clients to discuss PT Tech in-depth. Whose actions are consistent
with the Standards?
A. Durkny's only
B. Jensen's only
C. Both Durkny's and Jensen's
Correct Answer: A
Rationale: According to Standard III(B) (Fair Dealing), members and candidates may
provide more personal, specialized, or in-depth service to clients who are willing to pay
for premium services through higher management fees or higher levels of brokerage.
Question 4
According to the recommended procedures for compliance with the Standard relating to
performance presentation, members should:
A. Exclude terminated accounts from performance history
B. Consider the knowledge of the audience to whom a performance presentation is
addressed
C. Use a representative account when presenting the performance of the weighted
composite of similar portfolios
Correct Answer: B
Rationale: According to Standard III(D) (Performance Presentation), members can
meet the obligation of the Standard by considering the knowledge and sophistication of
the audience to whom a performance presentation is addressed.
Question 5
Gurdgep Singh, CFA, is an analyst with a hedge fund and works closely with his
supervisor, Joan Tanner, who earned her CFA designation 20 years ago. Singh becomes
aware that Tanner uses her CFA designation even though she no longer pays her
membership dues. Tanner uses the designation during several meetings that she and
Singh have with the firm's clients and emphasizes that all her team members, including
herself, are CFA charterholders. Has Singh violated the Standards?
A. No
B. Yes, the Standard relating to knowledge of the law
Page | 2
,C. Yes, the Standard relating to reference to CFA Institute, the CFA designation, and the
CFA program
Correct Answer: B
Rationale: According to Standard I(A) (Knowledge of the Law), members must not
knowingly participate or assist in violations and must dissociate from such violations.
By staying silent when false information is being given to clients, Singh is seen as
assisting in that misconduct.
Question 6
John McCay, CFA, is an analyst who has prepared a report on the cable industry based
on research from a variety of sources and analysts. He compiles these findings to form
his own opinion and distributes the report to clients without acknowledging his sources.
McCay has violated the Standards by:
A. Failing to cite the work of others
B. Failing to have a reasonable basis for his conclusions
C. Incorporating other analysts' research into his own work
Correct Answer: A
Rationale: According to Standard I(C) (Misrepresentation), one of the most egregious
practices is the preparation of research reports based on multiple sources of information
without acknowledging the sources. McCay violated this Standard by failing to cite the
work of others.
Question 7
Gardner Knight, CFA, is a product development specialist at an investment bank. Knight
is responsible for creating and marketing collateralized debt obligations (CDOs)
consisting of residential mortgage bonds. In the marketing brochure for his most recent
CDO, Knight provided a list of the mortgage bonds from which the CDO was created.
The brochure also states "an independent third party, the collateral manager, has sole
authority for the selection of all mortgage bonds used as collateral in the CDO."
However, Knight met with the collateral manager and contributed to determining the
bonds included in the CDO. Knight is least likely to be in violation of which of the
following Standards?
A. Suitability
B. Disclosure of Conflicts
C. Communication with Clients and Prospective Clients
Page | 3
, Correct Answer: A
Rationale: There is no indication that the investment is unsuitable for investors, so
there is no violation of Standard III(C) (Suitability).
Question 8
Meera Doka, CFA, manages an equity fund for clients. One day, the fund experiences a
large loss due to an event unforeseen by all market participants. Prior to the event, Doka
failed to disclose the risk of this event occurring to her clients. One month later, Doka
decides to outsource 5% of the fund's assets to an external manager. She does not
inform her clients of this change because the external manager follows an investment
process that is very similar to her fund's process. Are Doka's actions consistent with the
Standard relating to communication with clients and prospective clients?
A. Yes
B. No, because she failed to disclose the risk that resulted in the large loss
C. No, because she failed to inform her clients about outsourcing 5% of the fund's assets
Correct Answer: C
Rationale: According to Standard V(B) (Communications with Clients and Prospective
Clients), members should inform clients about the use of an outside manager to allow
clients to understand the full mix of products and strategies being applied.
Question 9
According to the Standards, if a member cannot discharge supervisory responsibilities
due to an inadequate compliance system, the member is:
A. Only required to decline in writing to accept supervisory responsibility
B. Only required to report the inadequate compliance system to CFA Institute
C. Both required to decline in writing to accept supervisory responsibility and to report
the inadequate compliance system to CFA Institute
Correct Answer: A
Rationale: According to Standard IV(C) (Responsibilities of Supervisors), if a member
cannot discharge supervisory responsibilities due to an inadequate compliance system,
the member should decline in writing to accept supervisory responsibility. There is no
requirement to report the inadequate compliance system to CFA Institute.
Question 10
A 12-year-old investment firm adopts the GIPS standards. To claim compliance with the
GIPS standards, the firm is initially required to present GIPS-compliant performance
history:
Page | 4
