CFA ESG Exam Questions With Verified And Updated Solutions.

CFA ESG Exam Questions With Verified And Updated Solutions. 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 - answerConventional 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 - answerMicrofinance bonds 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 - answerbiosphere integrity and climate 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 - answerReduced risk of fines 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 - answerExternalities occur due to environmental or social factors 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. - answerhave 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 - answerIGN 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. - answerESG 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. - answerCompanies making misleading claims about their environmental practices 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). - answerGRI 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) - answerUN 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) - answerShareholder engagement 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 - answerBest-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. - answerdouble materiality is an extension of financial materiality that considers the impacts of a company on the climate or any other ESG factor 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. - answeruniversal owners are large institutional investors that have diversified holdings 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