FSA LEVEL 1 EXAM QUESTIONS WITH
COMPLETE SOLUTIONS
What is the primary challenge that the disclosure of company policies (such as ESG
policies or whistleblower policies) can pose to investment analysis?
A. The presence of a company policy is represented through binary data, which does
not provide useful insight into actual company performance
B. Company policies always increase the labor burden of analysis, where large
narrative documents must be manually processed
C. Company policies may be written in response to poor performance and often provide
fraudulent data, reducing the reliability of the information
D. It is not always clear who at the company is accountable for implementing the policy,
inhibiting investor-investee engagement - Correct Answers –A
What objective prevails today as the focus of financial accounting?
A. Accuracy of the value of assets upon purchase
B. Decision-usefulness of reported information
C. Management's view of the entity's performance
D. Country-specific accounting standards - Correct Answers -B
Some of the earliest efforts to promote the disclosure of non-financial information can
be seen in the IFRS Management Commentary and the US SEC's Management
Discussion &
Analysis (MD&A). What two similarities exist between these two reporting instruments?
(Choose two)
A. They specify the use of key performance indicators (KPIs) for ESG data
B. They provide context and analysis to interpret a company's future performance
C. They are a natural location to disclose material sustainability information
D. They require a rigorous discussion of a company's value creation strategy - Correct
Answers -B, C
Of the organizations that offer definitions of materiality for corporate disclosure, which
two statements accurately characterize these organizations' approach to disclosure
location?
(Choose two)
A. Securities regulators specify disclosure in annual and periodic financial statements
B. CDSB specifies the disclosure of climate-related information in mainstream reports
C. Traditional accounting standard-setting organizations specify disclosure in financial
statements
, D. SASB specifies that material sustainability information applies disclosure in financial
statements - Correct Answers -B, C
How do trends in index investing influence corporate-investor engagement on
sustainability?
A. The decline of index investing can encourage investment stewardship through proxy
voting
B. The growth of index investing can encourage use of the "Wall Street rule" and
decrease dialogue-based engagement
C. The decline of index investing can encourage shareholders to file resolutions and
increase withdrawal rates
D. The growth of index investing can encourage investment stewardship based on the
way buy-sell decisions are made - Correct Answers -D
Corporate disclosures of sustainability information serve which two of the following
purposes in capital markets? (Choose two)
A. Aid in valuation for financial analysts
B. Demand additional regulation for corporations
C. Allow investors to assess risks and opportunities related to their investments
D. Prevent non-governmental organizations from "naming and shaming" poor ESG
performers - Correct Answers -A, C
The chart below presents examples of business initiatives designed to reflect the
different
stages of sustainability-based value creation, as identified by multiple thought leaders in
the field. Select the arrangement of initiatives that progress from early-stage to
latestage:
1. Incorporate inventory management and procurement processes to supplement
product delivery service
2. Adapting product delivery service to enhance delivery options
3. Upgrading product ordering processes to reduce costs, time, and/or errors
4. Refining new and old business lines to establish brand leadership
A. 1, 2, 3, 4
B. 3, 1, 2, 4
C. 2, 3, 1, 4
D. 3, 2, 1, 4 - Correct Answers -D
Which of the following is suitable to be included as an "activity metric" in the SASB
Standards?
A. CAPEX
B. History of product recalls
C. Number of media publications
D. A description of the company's strategy to protect customer data - Correct Answers -
C
Why is SASB's objective of cost-effectiveness for reporting companies ultimately in the
COMPLETE SOLUTIONS
What is the primary challenge that the disclosure of company policies (such as ESG
policies or whistleblower policies) can pose to investment analysis?
A. The presence of a company policy is represented through binary data, which does
not provide useful insight into actual company performance
B. Company policies always increase the labor burden of analysis, where large
narrative documents must be manually processed
C. Company policies may be written in response to poor performance and often provide
fraudulent data, reducing the reliability of the information
D. It is not always clear who at the company is accountable for implementing the policy,
inhibiting investor-investee engagement - Correct Answers –A
What objective prevails today as the focus of financial accounting?
A. Accuracy of the value of assets upon purchase
B. Decision-usefulness of reported information
C. Management's view of the entity's performance
D. Country-specific accounting standards - Correct Answers -B
Some of the earliest efforts to promote the disclosure of non-financial information can
be seen in the IFRS Management Commentary and the US SEC's Management
Discussion &
Analysis (MD&A). What two similarities exist between these two reporting instruments?
(Choose two)
A. They specify the use of key performance indicators (KPIs) for ESG data
B. They provide context and analysis to interpret a company's future performance
C. They are a natural location to disclose material sustainability information
D. They require a rigorous discussion of a company's value creation strategy - Correct
Answers -B, C
Of the organizations that offer definitions of materiality for corporate disclosure, which
two statements accurately characterize these organizations' approach to disclosure
location?
(Choose two)
A. Securities regulators specify disclosure in annual and periodic financial statements
B. CDSB specifies the disclosure of climate-related information in mainstream reports
C. Traditional accounting standard-setting organizations specify disclosure in financial
statements
, D. SASB specifies that material sustainability information applies disclosure in financial
statements - Correct Answers -B, C
How do trends in index investing influence corporate-investor engagement on
sustainability?
A. The decline of index investing can encourage investment stewardship through proxy
voting
B. The growth of index investing can encourage use of the "Wall Street rule" and
decrease dialogue-based engagement
C. The decline of index investing can encourage shareholders to file resolutions and
increase withdrawal rates
D. The growth of index investing can encourage investment stewardship based on the
way buy-sell decisions are made - Correct Answers -D
Corporate disclosures of sustainability information serve which two of the following
purposes in capital markets? (Choose two)
A. Aid in valuation for financial analysts
B. Demand additional regulation for corporations
C. Allow investors to assess risks and opportunities related to their investments
D. Prevent non-governmental organizations from "naming and shaming" poor ESG
performers - Correct Answers -A, C
The chart below presents examples of business initiatives designed to reflect the
different
stages of sustainability-based value creation, as identified by multiple thought leaders in
the field. Select the arrangement of initiatives that progress from early-stage to
latestage:
1. Incorporate inventory management and procurement processes to supplement
product delivery service
2. Adapting product delivery service to enhance delivery options
3. Upgrading product ordering processes to reduce costs, time, and/or errors
4. Refining new and old business lines to establish brand leadership
A. 1, 2, 3, 4
B. 3, 1, 2, 4
C. 2, 3, 1, 4
D. 3, 2, 1, 4 - Correct Answers -D
Which of the following is suitable to be included as an "activity metric" in the SASB
Standards?
A. CAPEX
B. History of product recalls
C. Number of media publications
D. A description of the company's strategy to protect customer data - Correct Answers -
C
Why is SASB's objective of cost-effectiveness for reporting companies ultimately in the
