FSA LEVEL 1 EXAM SET QUESTIONS
WITH CORRECT ANSWERS
On the spectrum of "values-" to "value"-focused investing, which investment strategy
that uses sustainability information is farthest on the "value" end?
A. Impact Investing
B. Negative Screening
C. ESG Integration
D. Positive Screening - Answer- C
Which two statements, if true, provide evidence that the potential disclosure topic of
Labor Practices fails to meet the criteria for inclusion in the Oil & Gas - Services
Standard?
(Choose two)
A. "Labor Practices is a frequent topic in media coverage of the industry and
shareholder resolutions in the industry but it is not important to our customers or our
board of directors."
B. "The industry is not unionized and strikes are a rare occurrence within the industry.
Workers are generally extremely well paid and labor practices are healthy for the most
part."
C. "There are instances where labor practices is material in a specific set of
circumstances— such as in Gabon in 2013—but it is not material across the industry."
D. "Surveyed customers and suppliers indicated that cost containment strategies
warranted disclosure except where it concerned what they viewed as a non-issue—
labor practices— even though labor - Answer- B, C
How does the concept of financial materiality manifest in today's definitions of double
materiality?
A. Sustainability information can lend insight into traditional financial drivers
B. Financially material information disclosed to investors is consistently relevant to non-
investor audiences
C. The materiality of social and environmental issues changes when companies change
their scenario analysis
D. The market's understanding of sustainability information changes the measurability of
sustainability issues using financial metrics - Answer- A
A national securities commission announced that starting next year, all listed companies
will be required to disclose ESG performance. The announcement was accompanied by
new sustainability disclosure guidance. The guidance provides a reporting template that
specifies which disclosure topics companies must report, including specific metrics and
units of measurement related to economic, environmental, and social performance.
During the first three years of the disclosure mandate, companies may choose to omit
certain metrics if they provide sound rationale explaining why the information is not yet
available. What two characteristics of regulatory disclosure guidance does this reflect?
, (Choose two)
A. Line-item
B. Principles-based
C. Comply-or-explain
D. Interpretive - Answer- A, C
What is a benefit of industry-specific sustainability disclosure guidance?
A. It provides companies with more detailed disclosure support, helping to refine internal
processes
B. It strengthens integrated reporting, helping companies better communicate how they
create value over time
C. It ensures comprehensive, uniform availability of information that can be used to
compare sector dynamics
D. It yields information that provides insight into the ways ESG issues drive value based
on business model. - Answer- D
What are two challenges investors face when integrating sustainability disclosures into
financial analysis? (Choose two)
A. Many companies disclose binary sustainability data rather than performance data
B. Material sustainability information that is currently disclosed is often not comparable
within an industry
C. There is an overabundance of ESG performance data which decreases the signal-to-
noise ratio
D. Most corporate sustainability reports include some level of assurance and is highly
reliable - Answer- A, B
In the sustainability disclosure value chain, which organizations are involved in the
production of corporate sustainability performance information, and which organizations
are involved in the use of corporate sustainability performance information?
A. Frameworks and standards, data providers, and reporting organizations produce
information. End users and software providers use information.
B. Data providers, disclosure guidance issuers, and ESG ratings produce information.
Securities exchanges and reporting organizations use information.
C. Analytics platforms and data aggregators produce information. Investors, regulators,
and non-government organizations (NGOs) use information.
D. Reporting organizations, disclosure platforms, and auditors produce information.
Data providers, analytics platforms, and regulators use information. - Answer- D
An analyst at an investment bank is conducting a discounted cash flow (DCF) analysis
as part of their evaluation of a group of telecommunications companies. The analyst
adjusts their original analysis based on each company's performance on the same
SASB metric. This event demonstrates that the specific metric met which characteristic
of SASB accounting metrics?
A. Financial
B. Aligned
C. Understandable
WITH CORRECT ANSWERS
On the spectrum of "values-" to "value"-focused investing, which investment strategy
that uses sustainability information is farthest on the "value" end?
A. Impact Investing
B. Negative Screening
C. ESG Integration
D. Positive Screening - Answer- C
Which two statements, if true, provide evidence that the potential disclosure topic of
Labor Practices fails to meet the criteria for inclusion in the Oil & Gas - Services
Standard?
(Choose two)
A. "Labor Practices is a frequent topic in media coverage of the industry and
shareholder resolutions in the industry but it is not important to our customers or our
board of directors."
B. "The industry is not unionized and strikes are a rare occurrence within the industry.
Workers are generally extremely well paid and labor practices are healthy for the most
part."
C. "There are instances where labor practices is material in a specific set of
circumstances— such as in Gabon in 2013—but it is not material across the industry."
D. "Surveyed customers and suppliers indicated that cost containment strategies
warranted disclosure except where it concerned what they viewed as a non-issue—
labor practices— even though labor - Answer- B, C
How does the concept of financial materiality manifest in today's definitions of double
materiality?
A. Sustainability information can lend insight into traditional financial drivers
B. Financially material information disclosed to investors is consistently relevant to non-
investor audiences
C. The materiality of social and environmental issues changes when companies change
their scenario analysis
D. The market's understanding of sustainability information changes the measurability of
sustainability issues using financial metrics - Answer- A
A national securities commission announced that starting next year, all listed companies
will be required to disclose ESG performance. The announcement was accompanied by
new sustainability disclosure guidance. The guidance provides a reporting template that
specifies which disclosure topics companies must report, including specific metrics and
units of measurement related to economic, environmental, and social performance.
During the first three years of the disclosure mandate, companies may choose to omit
certain metrics if they provide sound rationale explaining why the information is not yet
available. What two characteristics of regulatory disclosure guidance does this reflect?
, (Choose two)
A. Line-item
B. Principles-based
C. Comply-or-explain
D. Interpretive - Answer- A, C
What is a benefit of industry-specific sustainability disclosure guidance?
A. It provides companies with more detailed disclosure support, helping to refine internal
processes
B. It strengthens integrated reporting, helping companies better communicate how they
create value over time
C. It ensures comprehensive, uniform availability of information that can be used to
compare sector dynamics
D. It yields information that provides insight into the ways ESG issues drive value based
on business model. - Answer- D
What are two challenges investors face when integrating sustainability disclosures into
financial analysis? (Choose two)
A. Many companies disclose binary sustainability data rather than performance data
B. Material sustainability information that is currently disclosed is often not comparable
within an industry
C. There is an overabundance of ESG performance data which decreases the signal-to-
noise ratio
D. Most corporate sustainability reports include some level of assurance and is highly
reliable - Answer- A, B
In the sustainability disclosure value chain, which organizations are involved in the
production of corporate sustainability performance information, and which organizations
are involved in the use of corporate sustainability performance information?
A. Frameworks and standards, data providers, and reporting organizations produce
information. End users and software providers use information.
B. Data providers, disclosure guidance issuers, and ESG ratings produce information.
Securities exchanges and reporting organizations use information.
C. Analytics platforms and data aggregators produce information. Investors, regulators,
and non-government organizations (NGOs) use information.
D. Reporting organizations, disclosure platforms, and auditors produce information.
Data providers, analytics platforms, and regulators use information. - Answer- D
An analyst at an investment bank is conducting a discounted cash flow (DCF) analysis
as part of their evaluation of a group of telecommunications companies. The analyst
adjusts their original analysis based on each company's performance on the same
SASB metric. This event demonstrates that the specific metric met which characteristic
of SASB accounting metrics?
A. Financial
B. Aligned
C. Understandable
