CFA LEVEL II EXAM STUDY GUIDE
2026/2027 – 200 ACCURATE
QUESTIONS WITH CORRECT
DETAILED SOLUTIONS | NEWEST
VERSION
Description: This comprehensive revision set contains 200 multiple-choice
questions covering all major CFA Level II topic areas: Ethical & Professional
Standards, Quantitative Methods, Economics, Financial Reporting & Analysis,
Corporate Finance, Equity Valuation, Fixed Income, Derivatives, Alternative
Investments, and Portfolio Management. Each question includes a detailed correct
answer marked with ✅ and a full explanation. Answer choices are intentionally
randomized to avoid pattern recognition.
Keywords: CFA Level II, 2026, 2027, MCQ, revision, ethics, quantitative methods,
economics, financial reporting, corporate finance, equity, fixed income,
derivatives, alternative investments, portfolio management, exam prep, study
guide, correct answers, detailed solutions.
ETHICAL & PROFESSIONAL STANDARDS (Q1–Q20)
Q1. Under the CFA Institute Code of Ethics, which of the following is the most
accurate statement regarding the duty to clients?
A. Members must always prioritize employer interests over client interests.
B. Members must act with independence and objectivity only when managing large
,portfolios.
C. Members must place the integrity of the profession and the interests of clients above
their own personal interests. ✅
D. Members may accept gifts from clients without disclosure if the gift is less than $100.
Q2. A portfolio manager discovers a material error in a colleague’s research report
that has already been distributed to clients. According to the Standards, the
manager should:
A. Ignore the error to avoid embarrassing the colleague.
B. Immediately notify the compliance department and attempt to correct the error with
clients. ✅
C. Wait for the colleague to correct the error on their own.
D. Report the error only if the client asks about it.
Q3. Which of the following actions is most consistent with Standard I(B) –
Independence and Objectivity?
A. Accepting a lavish gift from a corporate issuer in exchange for favorable research.
B. Using a personal account to trade ahead of client accounts.
C. Rejecting a gift that could reasonably be expected to impair independence. ✅
D. Allowing a client to dictate the specific securities to be purchased.
Q4. Standard III(B) – Fair Dealing requires members to:
A. Treat all clients equally in terms of investment returns.
B. Deal fairly with all clients when providing investment analysis and taking investment
action. ✅
C. Give preferential treatment to larger clients.
D. Disclose all trades to the media before executing them.
Q5. A member is preparing a research report on a company where her spouse is a
senior executive. According to the Standards, she should:
A. Proceed with the report without disclosure.
B. Disclose the conflict of interest to clients and her employer. ✅
,C. Resign from her position immediately.
D. Only disclose the conflict if the report is favorable.
Q6. Under Standard IV(A) – Loyalty, a member who is planning to leave her
employer may:
A. Take client lists and proprietary models without permission.
B. Solicit clients before leaving the firm.
C. Make preparations to leave, but must not take confidential information or client lists.
✅
D. Use the employer’s resources to start a competing business.
Q7. Standard V(A) – Diligence and Reasonable Basis requires members to:
A. Only use quantitative models.
B. Exercise diligence, independence, and thoroughness in analyzing investments. ✅
C. Rely solely on the research of others.
D. Avoid using any third-party research.
Q8. A member is asked to write a favorable report on a company in exchange for a
large consulting fee. This is a violation of:
A. Standard I(A) – Knowledge of the Law.
B. Standard I(B) – Independence and Objectivity. ✅
C. Standard III(C) – Suitability.
D. Standard IV(B) – Additional Compensation.
Q9. Standard VI(A) – Disclosure of Conflicts requires members to:
A. Disclose all personal trades to the public.
B. Disclose all matters that could reasonably be expected to impair their independence
and objectivity. ✅
C. Disclose only conflicts that result in financial loss.
D. Disclose conflicts only to their employer.
Q10. Which of the following is a violation of Standard VII(B) – Reference to CFA
Institute, the CFA Designation, and the CFA Program?
, A. Stating that passing the CFA exam qualifies you to manage money.
B. Using the CFA designation after your name.
C. Referring to yourself as a “CFA Level II candidate.” ✅
D. Listing your CFA status on a business card.
Q11. A member receives a request from a client to backdate a trade to capture a
better price. The member should:
A. Comply with the request to maintain the client relationship.
B. Refuse and explain that backdating is unethical and illegal. ✅
C. Backdate the trade but document it as an error.
D. Ask the compliance department to approve the backdating.
Q12. Standard II – Integrity of Capital Markets prohibits:
A. Using material nonpublic information to trade. ✅
B. Trading on public information.
C. Conducting fundamental analysis.
D. Using technical analysis.
Q13. A member is a board member of a charity that receives donations from a
company he covers as an analyst. He should:
A. Not disclose this relationship because it is charitable.
B. Disclose this relationship to his employer and clients. ✅
C. Resign from the charity board.
D. Only disclose if the donations exceed $10,000.
Q14. Standard III(A) – Loyalty, Prudence, and Care requires members to:
A. Act in the best interest of their employer only.
B. Act with reasonable care and exercise prudent judgment in managing client assets. ✅
C. Maximize returns regardless of risk.
D. Follow only verbal client instructions.
Q15. A member overhears a conversation in an elevator about an upcoming
merger. He should:
2026/2027 – 200 ACCURATE
QUESTIONS WITH CORRECT
DETAILED SOLUTIONS | NEWEST
VERSION
Description: This comprehensive revision set contains 200 multiple-choice
questions covering all major CFA Level II topic areas: Ethical & Professional
Standards, Quantitative Methods, Economics, Financial Reporting & Analysis,
Corporate Finance, Equity Valuation, Fixed Income, Derivatives, Alternative
Investments, and Portfolio Management. Each question includes a detailed correct
answer marked with ✅ and a full explanation. Answer choices are intentionally
randomized to avoid pattern recognition.
Keywords: CFA Level II, 2026, 2027, MCQ, revision, ethics, quantitative methods,
economics, financial reporting, corporate finance, equity, fixed income,
derivatives, alternative investments, portfolio management, exam prep, study
guide, correct answers, detailed solutions.
ETHICAL & PROFESSIONAL STANDARDS (Q1–Q20)
Q1. Under the CFA Institute Code of Ethics, which of the following is the most
accurate statement regarding the duty to clients?
A. Members must always prioritize employer interests over client interests.
B. Members must act with independence and objectivity only when managing large
,portfolios.
C. Members must place the integrity of the profession and the interests of clients above
their own personal interests. ✅
D. Members may accept gifts from clients without disclosure if the gift is less than $100.
Q2. A portfolio manager discovers a material error in a colleague’s research report
that has already been distributed to clients. According to the Standards, the
manager should:
A. Ignore the error to avoid embarrassing the colleague.
B. Immediately notify the compliance department and attempt to correct the error with
clients. ✅
C. Wait for the colleague to correct the error on their own.
D. Report the error only if the client asks about it.
Q3. Which of the following actions is most consistent with Standard I(B) –
Independence and Objectivity?
A. Accepting a lavish gift from a corporate issuer in exchange for favorable research.
B. Using a personal account to trade ahead of client accounts.
C. Rejecting a gift that could reasonably be expected to impair independence. ✅
D. Allowing a client to dictate the specific securities to be purchased.
Q4. Standard III(B) – Fair Dealing requires members to:
A. Treat all clients equally in terms of investment returns.
B. Deal fairly with all clients when providing investment analysis and taking investment
action. ✅
C. Give preferential treatment to larger clients.
D. Disclose all trades to the media before executing them.
Q5. A member is preparing a research report on a company where her spouse is a
senior executive. According to the Standards, she should:
A. Proceed with the report without disclosure.
B. Disclose the conflict of interest to clients and her employer. ✅
,C. Resign from her position immediately.
D. Only disclose the conflict if the report is favorable.
Q6. Under Standard IV(A) – Loyalty, a member who is planning to leave her
employer may:
A. Take client lists and proprietary models without permission.
B. Solicit clients before leaving the firm.
C. Make preparations to leave, but must not take confidential information or client lists.
✅
D. Use the employer’s resources to start a competing business.
Q7. Standard V(A) – Diligence and Reasonable Basis requires members to:
A. Only use quantitative models.
B. Exercise diligence, independence, and thoroughness in analyzing investments. ✅
C. Rely solely on the research of others.
D. Avoid using any third-party research.
Q8. A member is asked to write a favorable report on a company in exchange for a
large consulting fee. This is a violation of:
A. Standard I(A) – Knowledge of the Law.
B. Standard I(B) – Independence and Objectivity. ✅
C. Standard III(C) – Suitability.
D. Standard IV(B) – Additional Compensation.
Q9. Standard VI(A) – Disclosure of Conflicts requires members to:
A. Disclose all personal trades to the public.
B. Disclose all matters that could reasonably be expected to impair their independence
and objectivity. ✅
C. Disclose only conflicts that result in financial loss.
D. Disclose conflicts only to their employer.
Q10. Which of the following is a violation of Standard VII(B) – Reference to CFA
Institute, the CFA Designation, and the CFA Program?
, A. Stating that passing the CFA exam qualifies you to manage money.
B. Using the CFA designation after your name.
C. Referring to yourself as a “CFA Level II candidate.” ✅
D. Listing your CFA status on a business card.
Q11. A member receives a request from a client to backdate a trade to capture a
better price. The member should:
A. Comply with the request to maintain the client relationship.
B. Refuse and explain that backdating is unethical and illegal. ✅
C. Backdate the trade but document it as an error.
D. Ask the compliance department to approve the backdating.
Q12. Standard II – Integrity of Capital Markets prohibits:
A. Using material nonpublic information to trade. ✅
B. Trading on public information.
C. Conducting fundamental analysis.
D. Using technical analysis.
Q13. A member is a board member of a charity that receives donations from a
company he covers as an analyst. He should:
A. Not disclose this relationship because it is charitable.
B. Disclose this relationship to his employer and clients. ✅
C. Resign from the charity board.
D. Only disclose if the donations exceed $10,000.
Q14. Standard III(A) – Loyalty, Prudence, and Care requires members to:
A. Act in the best interest of their employer only.
B. Act with reasonable care and exercise prudent judgment in managing client assets. ✅
C. Maximize returns regardless of risk.
D. Follow only verbal client instructions.
Q15. A member overhears a conversation in an elevator about an upcoming
merger. He should:
