California Chartered Financial Analyst
Exam (CFA) With Actual Questions &
Verified Answers, Plus Explained
Rationales/Expert Verified For
Guaranteed Pass 2026/Latest
Updated/Instant Download Pdf
1. Which ethical principle requires CFA charterholders to place client
interests before their own?
A. Integrity of capital markets
B. Professional competence
C. Duties to employers
D. Loyalty, prudence, and care
Answer: D
This principle mandates prioritizing client interests above
personal or employer interests.
2. Under GIPS standards, which return calculation method is
required?
A. Simple return
B. Modified Dietz
C. Time-weighted return
D. Money-weighted return
Answer: C
Time-weighted returns eliminate the impact of external cash
flows, ensuring comparability.
,3. Which financial statement reports a firm’s financial position at a
specific point in time?
A. Income statement
B. Cash flow statement
C. Statement of changes in equity
D. Balance sheet
Answer: D
The balance sheet presents assets, liabilities, and equity at a
specific date.
4. An increase in accounts receivable most likely results in:
A. Higher operating cash flow
B. Lower operating cash flow
C. Higher net income
D. No impact on cash flow
Answer: B
An increase in receivables indicates revenue not yet collected in
cash.
5. Which measure best evaluates a company’s short-term liquidity?
A. Debt-to-equity ratio
B. Current ratio
C. Return on equity
D. Gross margin
Answer: B
The current ratio compares current assets to current liabilities.
6. Under IFRS, inventory is measured at the lower of cost or:
A. Market value
B. Replacement cost
C. Net realizable value
D. Fair value
, Answer: C
IFRS requires valuation at lower of cost or NRV.
7. Which cost is treated as a period cost?
A. Direct materials
B. Direct labor
C. Manufacturing overhead
D. Selling expense
Answer: D
Selling expenses are expensed in the period incurred.
8. A bond’s duration measures its sensitivity to changes in:
A. Inflation
B. Credit risk
C. Interest rates
D. Currency risk
Answer: C
Duration estimates price changes due to interest rate
movements.
9. Which yield measure assumes reinvestment at the bond’s yield to
maturity?
A. Current yield
B. Yield to call
C. Spot rate
D. Yield to maturity
Answer: D
YTM assumes reinvestment at the same yield rate.
10. If interest rates rise, the price of a fixed-rate bond will:
A. Increase
B. Decrease
C. Remain unchanged
Exam (CFA) With Actual Questions &
Verified Answers, Plus Explained
Rationales/Expert Verified For
Guaranteed Pass 2026/Latest
Updated/Instant Download Pdf
1. Which ethical principle requires CFA charterholders to place client
interests before their own?
A. Integrity of capital markets
B. Professional competence
C. Duties to employers
D. Loyalty, prudence, and care
Answer: D
This principle mandates prioritizing client interests above
personal or employer interests.
2. Under GIPS standards, which return calculation method is
required?
A. Simple return
B. Modified Dietz
C. Time-weighted return
D. Money-weighted return
Answer: C
Time-weighted returns eliminate the impact of external cash
flows, ensuring comparability.
,3. Which financial statement reports a firm’s financial position at a
specific point in time?
A. Income statement
B. Cash flow statement
C. Statement of changes in equity
D. Balance sheet
Answer: D
The balance sheet presents assets, liabilities, and equity at a
specific date.
4. An increase in accounts receivable most likely results in:
A. Higher operating cash flow
B. Lower operating cash flow
C. Higher net income
D. No impact on cash flow
Answer: B
An increase in receivables indicates revenue not yet collected in
cash.
5. Which measure best evaluates a company’s short-term liquidity?
A. Debt-to-equity ratio
B. Current ratio
C. Return on equity
D. Gross margin
Answer: B
The current ratio compares current assets to current liabilities.
6. Under IFRS, inventory is measured at the lower of cost or:
A. Market value
B. Replacement cost
C. Net realizable value
D. Fair value
, Answer: C
IFRS requires valuation at lower of cost or NRV.
7. Which cost is treated as a period cost?
A. Direct materials
B. Direct labor
C. Manufacturing overhead
D. Selling expense
Answer: D
Selling expenses are expensed in the period incurred.
8. A bond’s duration measures its sensitivity to changes in:
A. Inflation
B. Credit risk
C. Interest rates
D. Currency risk
Answer: C
Duration estimates price changes due to interest rate
movements.
9. Which yield measure assumes reinvestment at the bond’s yield to
maturity?
A. Current yield
B. Yield to call
C. Spot rate
D. Yield to maturity
Answer: D
YTM assumes reinvestment at the same yield rate.
10. If interest rates rise, the price of a fixed-rate bond will:
A. Increase
B. Decrease
C. Remain unchanged
