CFA lv 1 mock Exams questions and answers
2025\2026 A+ Grade
Jack Fahey, CFA, is a portfolio manager of Pacific Sunrise Investments, which does not claim compliance
with the Global Investment Performance Standards (GIPS). When presenting the historical performance
of his small-cap growth composite, Fahey notes that only fee-paying accounts are included, but he does
not mention that both discretionary and non-discretionary accounts are included. Has Fahey most likely
violated the Standards?
Yes, with respect to performance presentation only
Yes, with respect to both performance presentation and misrepresenation
No, because Pacific Sunrise Investments does not claim compliance with GIPS
- correct answer B)
According to Standard I(C) - Misrepresentation, members and candidates "must not knowingly make any
misrepresentations relating to investment analysis, recommendations, actions, or other professional
activities."
Standard III(D) - Performance Presentation requires members and candidates to make reasonable
efforts to present performance information in a manner that is "fair, accurate, and complete."
In this example, Fahey violates both of these Standards by failing to note that the small-cap growth
composite includes both discretionary and non-discretionary accounts, as the composite's performance
may misrepresent his abilities as a portfolio manager. The compliance status of Fahey's firm with GIPS is
irrelevant to whether he has personally violated these Standards.
Ralph Sheppard, CFA, is both an equity analyst covering the consumer goods sector and an avid chef in
his spare time. On Tuesday evenings, with his employer's written consent, Sheppard teaches a class at a
local culinary school, for which he is compensated at the standard rate paid to all instructors. Recently,
the culinary school where Sheppard teaches was chosen to test prototypes of a new line of kitchen
,appliances being developed by Cuisineware, a manufacturer that Sheppard has covered for over a
decade in his role as an analyst. After using the prototypes for the first time, Sheppard is convinced
there will be significant demand for this new line of appliances. The next morning, he makes an upward
revision to his previously published price target for Cuisineware's stock, but he does not disclose that he
has tested the company's prototypes. Sheppard has most likely violated the CFA Standards with respect
to:
dis
- correct answer B)
Sheppard has violated Standard V(A) - Diligence and Reasonable Basis, which requires members and
candidates to have a "reasonable and adequate basis, supported by appropriate research and
investigation, for any investment analysis, recommendation, or action." In this example, Sheppard does
not have a reasonable and adequate basis for increasing the price target for Cuisineware's stock simply
because he is familiar with the company and has tested the prototypes for its new line of appliances.
However, working at a culinary school that was chosen to test Cuisineware's prototypes does not
constitute a benefit that must be disclosed according to Standard VI(A) - Disclosure of Conflicts.
ucas Stamford, CFA, and Tamara Howarth, CFA, are money managers with a large investment firm. Both
receive quarterly bonuses from their employer for each of their clients whose portfolio outperforms its
benchmark. Additionally, both receive quarterly bonuses based on client reports on service quality.
Howarth discloses the details of both of these bonuses to clients and prospective clients orally and in
writing, whereas Stamford only discloses the details of the bonus based on outperforming a benchmark.
Which of the following statements is most likely correct?
Howarth and Stamford have both violated the CFA Standards
Howarth and Stamford have both adhered to the CFA Standards
Howarth has adhered to the CFA Standards, but Stamford has not
- correct answer B)
Standard VI(A) - Disclosure of Conflicts requires members and candidates to make "full and fair
disclosure of all matters that could reasonably be expected to impair their independence and
,objectivity." In this example, both Howard and Stamford have adhered to this Standard because they
have disclosed the details of their bonuses based on short-term investment performance to their clients
and prospective clients. Stamford does not violated this Standard by failing to disclose the details of a
bonus based on client reports on service quality.
Carla Pollini, CFA, is responsible for recommending third-party managers for a defined benefit pension
plan. While reviewing several proposals for the plan's latest allocation, Pollini learns that Roberto
Lacobucci, manager of the Eurasian Equity Fund, directs a percentage of the fund's profits to an animal
sanctuary. After concluding her review of several funds, Pollini recommends that the plan's trustees
choose the Eurasian Equity Fund. Her methodology for ranking the various proposals includes
consideration of each fund's commitment to environmental, social, and governance (ESG) factors. Pollini
does not disclose to the trustees that she made a personal donation to the animal sanctuary that is
supported by the Eurasia Equity Fund. Has Pollini most likely violated the Standards?
No
Yes, with respect to disclosure of conflicts
Yes, with respect to both disclosure of conflicts and independence and objectivity
- correct answer No.
Pollini would have violated Standard I(B) - Independence and Objectivity if she had solicited a donation
from Lacobucci for one of her preferred charities when deciding whether to recommend his fund to the
pension plan's trustees. However, she does not compromise her independence or objectivity by making
a personal donation to a charity that she learned about while conducting due diligence as part of her
professional responsibilities. Even if Lacobucci had solicited the donation, and there's no evidence that
he did, Pollini would not violate the Standards by making a donation because she would not be using her
position as the person responsible for recommending funds to benefit personally.
Neither has Pollini violated Standard VI(A) - Disclosure of Conflicts. The fact that she has decided to
personally support the same charity as Lacobucci is not something that could reasonably be expected to
impair her independence and objectivity. She would have to be the president or director for there to be
a clear conflict.
Robert Choi, CFA, works for Challenger Asset Management, which offers its clients ten emerging market
equity funds. All ten funds had negative five-year returns, although each has outperformed its
benchmark. Choi approves an advertisement that includes a statement that the company's funds have
, provided investors with "positive excess returns" for investors seeking exposure to these markets. Each
fund's five-year returns are presented alongside the returns of their relevant benchmark and a website
where potential clients can obtain more detailed information is listed. Has Choi most likely violated the
Standards?
No
Yes, by failing to provide sufficient information
Yes, by misleading potential clients with the implication that returns have been positive
- correct answer No.
According to Standard III(D) - Performance Presentation, members and candidates must ensure that
communication of performance is "fair, accurate, and complete."
In this example, the claim of positive excess returns is accurate because, although the funds have posted
negative returns, each fund has outperformed its relevant benchmark. The clients are also given a
presentation of the five-year returns with the benchmark returns, eliminating any potential
misinterpretation.
When the format of communications does not allow for a detailed presentation, it is recommended that
a reference to the limited nature of the information be made, and more detailed information must be
provided upon request.
Katrina Bradshaw passed the Level II CFA exam in 2020 and is currently registered to take the next Level
III exam. Which of the following references to her participation in the CFA Program is most likely
consistent with the Standards?
Level III CFA (Candidate)
CFA Level II passed (2020)
2025\2026 A+ Grade
Jack Fahey, CFA, is a portfolio manager of Pacific Sunrise Investments, which does not claim compliance
with the Global Investment Performance Standards (GIPS). When presenting the historical performance
of his small-cap growth composite, Fahey notes that only fee-paying accounts are included, but he does
not mention that both discretionary and non-discretionary accounts are included. Has Fahey most likely
violated the Standards?
Yes, with respect to performance presentation only
Yes, with respect to both performance presentation and misrepresenation
No, because Pacific Sunrise Investments does not claim compliance with GIPS
- correct answer B)
According to Standard I(C) - Misrepresentation, members and candidates "must not knowingly make any
misrepresentations relating to investment analysis, recommendations, actions, or other professional
activities."
Standard III(D) - Performance Presentation requires members and candidates to make reasonable
efforts to present performance information in a manner that is "fair, accurate, and complete."
In this example, Fahey violates both of these Standards by failing to note that the small-cap growth
composite includes both discretionary and non-discretionary accounts, as the composite's performance
may misrepresent his abilities as a portfolio manager. The compliance status of Fahey's firm with GIPS is
irrelevant to whether he has personally violated these Standards.
Ralph Sheppard, CFA, is both an equity analyst covering the consumer goods sector and an avid chef in
his spare time. On Tuesday evenings, with his employer's written consent, Sheppard teaches a class at a
local culinary school, for which he is compensated at the standard rate paid to all instructors. Recently,
the culinary school where Sheppard teaches was chosen to test prototypes of a new line of kitchen
,appliances being developed by Cuisineware, a manufacturer that Sheppard has covered for over a
decade in his role as an analyst. After using the prototypes for the first time, Sheppard is convinced
there will be significant demand for this new line of appliances. The next morning, he makes an upward
revision to his previously published price target for Cuisineware's stock, but he does not disclose that he
has tested the company's prototypes. Sheppard has most likely violated the CFA Standards with respect
to:
dis
- correct answer B)
Sheppard has violated Standard V(A) - Diligence and Reasonable Basis, which requires members and
candidates to have a "reasonable and adequate basis, supported by appropriate research and
investigation, for any investment analysis, recommendation, or action." In this example, Sheppard does
not have a reasonable and adequate basis for increasing the price target for Cuisineware's stock simply
because he is familiar with the company and has tested the prototypes for its new line of appliances.
However, working at a culinary school that was chosen to test Cuisineware's prototypes does not
constitute a benefit that must be disclosed according to Standard VI(A) - Disclosure of Conflicts.
ucas Stamford, CFA, and Tamara Howarth, CFA, are money managers with a large investment firm. Both
receive quarterly bonuses from their employer for each of their clients whose portfolio outperforms its
benchmark. Additionally, both receive quarterly bonuses based on client reports on service quality.
Howarth discloses the details of both of these bonuses to clients and prospective clients orally and in
writing, whereas Stamford only discloses the details of the bonus based on outperforming a benchmark.
Which of the following statements is most likely correct?
Howarth and Stamford have both violated the CFA Standards
Howarth and Stamford have both adhered to the CFA Standards
Howarth has adhered to the CFA Standards, but Stamford has not
- correct answer B)
Standard VI(A) - Disclosure of Conflicts requires members and candidates to make "full and fair
disclosure of all matters that could reasonably be expected to impair their independence and
,objectivity." In this example, both Howard and Stamford have adhered to this Standard because they
have disclosed the details of their bonuses based on short-term investment performance to their clients
and prospective clients. Stamford does not violated this Standard by failing to disclose the details of a
bonus based on client reports on service quality.
Carla Pollini, CFA, is responsible for recommending third-party managers for a defined benefit pension
plan. While reviewing several proposals for the plan's latest allocation, Pollini learns that Roberto
Lacobucci, manager of the Eurasian Equity Fund, directs a percentage of the fund's profits to an animal
sanctuary. After concluding her review of several funds, Pollini recommends that the plan's trustees
choose the Eurasian Equity Fund. Her methodology for ranking the various proposals includes
consideration of each fund's commitment to environmental, social, and governance (ESG) factors. Pollini
does not disclose to the trustees that she made a personal donation to the animal sanctuary that is
supported by the Eurasia Equity Fund. Has Pollini most likely violated the Standards?
No
Yes, with respect to disclosure of conflicts
Yes, with respect to both disclosure of conflicts and independence and objectivity
- correct answer No.
Pollini would have violated Standard I(B) - Independence and Objectivity if she had solicited a donation
from Lacobucci for one of her preferred charities when deciding whether to recommend his fund to the
pension plan's trustees. However, she does not compromise her independence or objectivity by making
a personal donation to a charity that she learned about while conducting due diligence as part of her
professional responsibilities. Even if Lacobucci had solicited the donation, and there's no evidence that
he did, Pollini would not violate the Standards by making a donation because she would not be using her
position as the person responsible for recommending funds to benefit personally.
Neither has Pollini violated Standard VI(A) - Disclosure of Conflicts. The fact that she has decided to
personally support the same charity as Lacobucci is not something that could reasonably be expected to
impair her independence and objectivity. She would have to be the president or director for there to be
a clear conflict.
Robert Choi, CFA, works for Challenger Asset Management, which offers its clients ten emerging market
equity funds. All ten funds had negative five-year returns, although each has outperformed its
benchmark. Choi approves an advertisement that includes a statement that the company's funds have
, provided investors with "positive excess returns" for investors seeking exposure to these markets. Each
fund's five-year returns are presented alongside the returns of their relevant benchmark and a website
where potential clients can obtain more detailed information is listed. Has Choi most likely violated the
Standards?
No
Yes, by failing to provide sufficient information
Yes, by misleading potential clients with the implication that returns have been positive
- correct answer No.
According to Standard III(D) - Performance Presentation, members and candidates must ensure that
communication of performance is "fair, accurate, and complete."
In this example, the claim of positive excess returns is accurate because, although the funds have posted
negative returns, each fund has outperformed its relevant benchmark. The clients are also given a
presentation of the five-year returns with the benchmark returns, eliminating any potential
misinterpretation.
When the format of communications does not allow for a detailed presentation, it is recommended that
a reference to the limited nature of the information be made, and more detailed information must be
provided upon request.
Katrina Bradshaw passed the Level II CFA exam in 2020 and is currently registered to take the next Level
III exam. Which of the following references to her participation in the CFA Program is most likely
consistent with the Standards?
Level III CFA (Candidate)
CFA Level II passed (2020)
