CFA ESG Certificate Exam 100%
Correct!!
What is ESG investing?
a) an approach to managing companies that explicitly acknowledges the relevance of
environmental, social, and governance factors in corporate decision making
b) an approach to managing companies that explicitly acknowledges the relevance of
environmental, social, and economic factors in investment decision making
c) an approach to managing assets where investors explicitly acknowledge the
relevance of environmental, social, and governance factors in their investment decisions
d) an approach to managing assets where investors explicitly acknowledge the
relevance of environmental, social, and economic factors in corporate engagement -
ANSWERSc
Which of the following is not an example of a social factor?
a) Labor rights
b) Local communities
c) Product safety
d) Biodiversity - ANSWERSd
In what sense are ESG considerations non-financial?
a) They are difficult to value precisely and difficult to time
b) They are issues that will never turn into financials
c) They sit in a different category of performance
d) They can only every be measured qualitatively - ANSWERSa
For which of the following sectors will the management of greenhouse gas emissions be
most material?
a) Software
b) Recruitment
c) Power generation
d) Fund management - ANSWERSc
Which of the following is not a typical method by which ESG is reflected in investment
approaches?
a) Integrating ESG into investment decision making
b) Engaging actively with companies on ESG matters
c) Engaging in public policy debates on ESG issues
d) Disclosing the investor's corporate social responsibility activities - ANSWERSd
Which of the following is not a form of ESG investment?
a) Valuation investment
b) Ethical investment
,c) Thematic investment
d) Impact investment - ANSWERSa
What are the four broad groupings of issues covered by the UN Global Compact?
a) Environmental, social, governance, and impact
b) Human rights, labor, environment, and anti corruption
c) Poverty, diversity, sustainability, and transparency
d) Education, development, fairness, independence - ANSWERSb
What is not one of the three P's in the triple bottom line concept?
a) People
b) Planet
c) Profit
d) Principle - ANSWERSd
Which of the following statements is true about best-in-class investments?
a) It involves selecting only the companies that overcome a defined ranking hurdle
b) It cannot be used to maintain key characteristics, such as regional and sectoral
diversification of an index
c) It refers to selecting companies that fall under a sustainability-related theme
d) It refers to allocating capital to assets that best mitigate climate change -
ANSWERSa
Which of the following sectors is NOT typically excluded by ethical and faith-based
investors?
a) Tobacco
b) Alcohol
c) Controversial weapons
d) Technology - ANSWERSd
The efficiency of shareholder engagement does NOT depend on...
a) the scale of ownership of the individual investor or the collective initiative
b) the quality of the engagement dialogue and method used
c) whether divestment is known to be a possible sanction
d) the amount of security in free float - ANSWERSd
In which ways can ESG matters become financially material for a company, and
contribute to reduced risk and enhanced return?
a) Increased cost and reduced efficiency
b) Increased externality
c) Increased risk of fines
d) Increased adaptability to sustainable megatrends - ANSWERSd
What kinds of situations does the term 'negative externality' best describe?
a) Situations where the production of goods induces costs to others that are not
reflected in the prices charged for them
, b) Situations where the consumption of services induces benefits to others that are not
reflected in the prices charged for them
c) Situations where the production or consumption of a product or service's private price
equilibrium cannot reflect the true costs of that product or service for society as a whole
d) Situations where the production or consumption of a product or service's private price
equilibrium cannot reflect the true benefits of that product or service for society as a
whole - ANSWERSc
According to Oxfam, "reports show that the richest 1% in the world have more than
double the wealth of 6.9 billion people." Which megatrend does this refer to?
a) Emerging and urban
b) Technological disruption
c) Demographic changes and wealth inequality
d) Climate change and resource scarcity - ANSWERSc
What is the most probable reason why an investor would engage with policy makers on
ESG?
a) The consideration of ESG related matters can contribute to the proper functioning of
the financial markets
b) Asset owners need regulators to level the playing field in order to be able to increase
their percentage of ESG investments
c) Policy consultations on ESG investing are mandatory in order to ensure that all
perspectives are taken into consideration
d) ESG investors require a sound and stable financial system in order to make alpha
from ESG megatrends - ANSWERSa
Which regions manage the highest proportion of sustainable and responsible investing
assets?
a) Asia and North America
b) Australia and USA
c) USA and Europe
d) Asia and Europe - ANSWERSc
What is the largest sustainable investment strategy globally?
a) Impact investing
b) Best in class
c) ESG integration
d) Negative screening - ANSWERSd
The largest and second largest asset classes, which implement responsible investment,
are respectively...
a) public equities and fixed income
b) passive equities and active equities
c) fixed income and infrastructure
d) hedge funds and commodities - ANSWERSa
Correct!!
What is ESG investing?
a) an approach to managing companies that explicitly acknowledges the relevance of
environmental, social, and governance factors in corporate decision making
b) an approach to managing companies that explicitly acknowledges the relevance of
environmental, social, and economic factors in investment decision making
c) an approach to managing assets where investors explicitly acknowledge the
relevance of environmental, social, and governance factors in their investment decisions
d) an approach to managing assets where investors explicitly acknowledge the
relevance of environmental, social, and economic factors in corporate engagement -
ANSWERSc
Which of the following is not an example of a social factor?
a) Labor rights
b) Local communities
c) Product safety
d) Biodiversity - ANSWERSd
In what sense are ESG considerations non-financial?
a) They are difficult to value precisely and difficult to time
b) They are issues that will never turn into financials
c) They sit in a different category of performance
d) They can only every be measured qualitatively - ANSWERSa
For which of the following sectors will the management of greenhouse gas emissions be
most material?
a) Software
b) Recruitment
c) Power generation
d) Fund management - ANSWERSc
Which of the following is not a typical method by which ESG is reflected in investment
approaches?
a) Integrating ESG into investment decision making
b) Engaging actively with companies on ESG matters
c) Engaging in public policy debates on ESG issues
d) Disclosing the investor's corporate social responsibility activities - ANSWERSd
Which of the following is not a form of ESG investment?
a) Valuation investment
b) Ethical investment
,c) Thematic investment
d) Impact investment - ANSWERSa
What are the four broad groupings of issues covered by the UN Global Compact?
a) Environmental, social, governance, and impact
b) Human rights, labor, environment, and anti corruption
c) Poverty, diversity, sustainability, and transparency
d) Education, development, fairness, independence - ANSWERSb
What is not one of the three P's in the triple bottom line concept?
a) People
b) Planet
c) Profit
d) Principle - ANSWERSd
Which of the following statements is true about best-in-class investments?
a) It involves selecting only the companies that overcome a defined ranking hurdle
b) It cannot be used to maintain key characteristics, such as regional and sectoral
diversification of an index
c) It refers to selecting companies that fall under a sustainability-related theme
d) It refers to allocating capital to assets that best mitigate climate change -
ANSWERSa
Which of the following sectors is NOT typically excluded by ethical and faith-based
investors?
a) Tobacco
b) Alcohol
c) Controversial weapons
d) Technology - ANSWERSd
The efficiency of shareholder engagement does NOT depend on...
a) the scale of ownership of the individual investor or the collective initiative
b) the quality of the engagement dialogue and method used
c) whether divestment is known to be a possible sanction
d) the amount of security in free float - ANSWERSd
In which ways can ESG matters become financially material for a company, and
contribute to reduced risk and enhanced return?
a) Increased cost and reduced efficiency
b) Increased externality
c) Increased risk of fines
d) Increased adaptability to sustainable megatrends - ANSWERSd
What kinds of situations does the term 'negative externality' best describe?
a) Situations where the production of goods induces costs to others that are not
reflected in the prices charged for them
, b) Situations where the consumption of services induces benefits to others that are not
reflected in the prices charged for them
c) Situations where the production or consumption of a product or service's private price
equilibrium cannot reflect the true costs of that product or service for society as a whole
d) Situations where the production or consumption of a product or service's private price
equilibrium cannot reflect the true benefits of that product or service for society as a
whole - ANSWERSc
According to Oxfam, "reports show that the richest 1% in the world have more than
double the wealth of 6.9 billion people." Which megatrend does this refer to?
a) Emerging and urban
b) Technological disruption
c) Demographic changes and wealth inequality
d) Climate change and resource scarcity - ANSWERSc
What is the most probable reason why an investor would engage with policy makers on
ESG?
a) The consideration of ESG related matters can contribute to the proper functioning of
the financial markets
b) Asset owners need regulators to level the playing field in order to be able to increase
their percentage of ESG investments
c) Policy consultations on ESG investing are mandatory in order to ensure that all
perspectives are taken into consideration
d) ESG investors require a sound and stable financial system in order to make alpha
from ESG megatrends - ANSWERSa
Which regions manage the highest proportion of sustainable and responsible investing
assets?
a) Asia and North America
b) Australia and USA
c) USA and Europe
d) Asia and Europe - ANSWERSc
What is the largest sustainable investment strategy globally?
a) Impact investing
b) Best in class
c) ESG integration
d) Negative screening - ANSWERSd
The largest and second largest asset classes, which implement responsible investment,
are respectively...
a) public equities and fixed income
b) passive equities and active equities
c) fixed income and infrastructure
d) hedge funds and commodities - ANSWERSa
