CFA Investment Foundations Mock Exam Questions
||100% Correct Answers||Latest 2024/2025
Dealers,
Dealers act as principals, so they are
deemed proprietary traders. Dealers
Proprietary trading is most likely carried
trade on behalf of their own accounts and
out by:
use their own capital to make markets.
B is incorrect. Brokers arrange deals be-
dealers.
tween the buyers and the sellers. They
brokers.
do not trade for their own accounts. C
settlement agents.
is incorrect. Settlement agents provide
services to clear and settle deals after
they have been negotiated.
to look outside their local market for in-
vestment opportunities.
Q. Globalisation in the investment indus-
A is correct. Globalisation occurs as in-
try is associated with the growing ten-
vestors develop a growing tendency to
dency of investors:
look outside their local markets for bet-
ter portfolio diversification and higher re-
to look outside their local market for in-
turns. B is incorrect. The decision to
vestment opportunities.
hedge various risks will depend on the
to prefer to hedge the risks of foreign
individual investor's needs and beliefs,
investment, such as currency risk.
not the extent of globalisation. C is in-
in smaller countries to compete more ef- correct. Globalisation gives all investors
fectively with those in larger countries
more opportunities but does not favour
one group over another.
efficiently allocate scarce resources to
their most productive uses
The goal of all economic systems is to: The goal of all economic systems is the
efficient allocation of scarce resources
efficiently allocate scarce resources to to their most productive uses. People
their most productive uses. have an unlimited desire for goods and
produce enough goods and services to services, but resources are limited. Eco-
satisfy the desires of all consumers. nomic systems must address three ques-
support government spending on public tions: (1) What should be produced? (2)
services, such as education, defence, How should it be produced? (3) Who
and infrastructure. should receive what is produced? The
goal is to answer these questions in a
way that best satisfies consumers' needs
, CFA Investment Foundations Mock Exam Questions
||100% Correct Answers||Latest 2024/2025
An individual who helps buyers and sell-
ers find and trade with one another is
a(n):
Broker
broker.
dealer.
auditor.
Securities regulations are created by:
legislative bodies. Government Agencies
individual investors.
government agencies.
The CFA Institute Code of Ethics re-
quires members to:
protect clients' interests at all times and
encourage competitors to increase their
in all situations.
levels of competence.
encourage competitors to increase their
levels of competence.
ensure investment recommendations
are similar across an industry.
An employee is assigned a complicated
task by her supervisor but believes she
does not have the technical skills to carry
it out. The employee should:
Refuse to carry out the assignment
refuse to carry out the assignment.
carry out the work as best as she can.
get a co-worker to do it and take credit
for the work.
Investment advisers have an ethical
obligation to:
protect their own interests. Exercise independent judgment
exercise independent judgment.
sell products with the highest fees.
, CFA Investment Foundations Mock Exam Questions
||100% Correct Answers||Latest 2024/2025
Based on the CFA Institute Standards
of Practice, investment advisers should
manage a client's investment portfolio
the same way they would manage:
Their own assets
their own assets.
other client accounts.
the account if managed by a competitor.
During a job interview, a potential em-
ployer described the CFA Institute Code
of Ethics as "a set of principles estab-
lishing rules governing ethical behaviour
required of investment professionals to-
ward their clients and employers". Does
this description fully capture the Code of
Ethics' requirement to act in an ethical No, the code of ethics also require ethical
manner? interaction with all capital market partici-
pants
Yes
No, the Code of Ethics also requires eth-
ical behaviour when dealing with poten-
tial clients
No, the Code of Ethics also requires ethi-
cal interaction with all capital market par-
ticipants
Regulators often seek public consulta-
tion prior to the implementation of new
regulations in order to:
educate consumers and service Improve the rules by undertaking a
providers on the new rules. cost-benefit analysis
improve the final rules by undertaking a
cost-benefit analysis.
ensure that the new rules are favourable
to those likely to be affected.
Regulations prohibiting front running are
types of: Trading rules
, CFA Investment Foundations Mock Exam Questions
||100% Correct Answers||Latest 2024/2025
trading rules.
operational rules.
sales practice rules.
Regulators help capital markets do all of
the following except:
Ensure investors are treated equally
reduce investment risk.
allocate capital to productive use.
ensure investors are treated equally.
Net capital rules are put in place to pre-
vent all of the following except:
losses experienced by firms
global financial contagion.
losses experienced by firms.
the use of excessive leverage.
The processes by which regulations are
developed:
are similar across the globe. Vary widely from informal to formal
vary widely from informal to formal.
are standardised across the various ju-
risdictions within a country.
A store owner recently turned down a
substantial cash offer for his store and
the land on which the store is located.
Although the store owner considered the
offer to be fair, he wanted to continue
running the business. This year, his busi-
ness has incurred costs for merchandise
sold; wages paid to workers, including The opportunity cost of the land and the
his own salary; utilities; and property tax- store
es. When determining the business's ac-
counting profit for the period, he is most
likely to correctly exclude which of the
following:
his own salary.
property taxes.
||100% Correct Answers||Latest 2024/2025
Dealers,
Dealers act as principals, so they are
deemed proprietary traders. Dealers
Proprietary trading is most likely carried
trade on behalf of their own accounts and
out by:
use their own capital to make markets.
B is incorrect. Brokers arrange deals be-
dealers.
tween the buyers and the sellers. They
brokers.
do not trade for their own accounts. C
settlement agents.
is incorrect. Settlement agents provide
services to clear and settle deals after
they have been negotiated.
to look outside their local market for in-
vestment opportunities.
Q. Globalisation in the investment indus-
A is correct. Globalisation occurs as in-
try is associated with the growing ten-
vestors develop a growing tendency to
dency of investors:
look outside their local markets for bet-
ter portfolio diversification and higher re-
to look outside their local market for in-
turns. B is incorrect. The decision to
vestment opportunities.
hedge various risks will depend on the
to prefer to hedge the risks of foreign
individual investor's needs and beliefs,
investment, such as currency risk.
not the extent of globalisation. C is in-
in smaller countries to compete more ef- correct. Globalisation gives all investors
fectively with those in larger countries
more opportunities but does not favour
one group over another.
efficiently allocate scarce resources to
their most productive uses
The goal of all economic systems is to: The goal of all economic systems is the
efficient allocation of scarce resources
efficiently allocate scarce resources to to their most productive uses. People
their most productive uses. have an unlimited desire for goods and
produce enough goods and services to services, but resources are limited. Eco-
satisfy the desires of all consumers. nomic systems must address three ques-
support government spending on public tions: (1) What should be produced? (2)
services, such as education, defence, How should it be produced? (3) Who
and infrastructure. should receive what is produced? The
goal is to answer these questions in a
way that best satisfies consumers' needs
, CFA Investment Foundations Mock Exam Questions
||100% Correct Answers||Latest 2024/2025
An individual who helps buyers and sell-
ers find and trade with one another is
a(n):
Broker
broker.
dealer.
auditor.
Securities regulations are created by:
legislative bodies. Government Agencies
individual investors.
government agencies.
The CFA Institute Code of Ethics re-
quires members to:
protect clients' interests at all times and
encourage competitors to increase their
in all situations.
levels of competence.
encourage competitors to increase their
levels of competence.
ensure investment recommendations
are similar across an industry.
An employee is assigned a complicated
task by her supervisor but believes she
does not have the technical skills to carry
it out. The employee should:
Refuse to carry out the assignment
refuse to carry out the assignment.
carry out the work as best as she can.
get a co-worker to do it and take credit
for the work.
Investment advisers have an ethical
obligation to:
protect their own interests. Exercise independent judgment
exercise independent judgment.
sell products with the highest fees.
, CFA Investment Foundations Mock Exam Questions
||100% Correct Answers||Latest 2024/2025
Based on the CFA Institute Standards
of Practice, investment advisers should
manage a client's investment portfolio
the same way they would manage:
Their own assets
their own assets.
other client accounts.
the account if managed by a competitor.
During a job interview, a potential em-
ployer described the CFA Institute Code
of Ethics as "a set of principles estab-
lishing rules governing ethical behaviour
required of investment professionals to-
ward their clients and employers". Does
this description fully capture the Code of
Ethics' requirement to act in an ethical No, the code of ethics also require ethical
manner? interaction with all capital market partici-
pants
Yes
No, the Code of Ethics also requires eth-
ical behaviour when dealing with poten-
tial clients
No, the Code of Ethics also requires ethi-
cal interaction with all capital market par-
ticipants
Regulators often seek public consulta-
tion prior to the implementation of new
regulations in order to:
educate consumers and service Improve the rules by undertaking a
providers on the new rules. cost-benefit analysis
improve the final rules by undertaking a
cost-benefit analysis.
ensure that the new rules are favourable
to those likely to be affected.
Regulations prohibiting front running are
types of: Trading rules
, CFA Investment Foundations Mock Exam Questions
||100% Correct Answers||Latest 2024/2025
trading rules.
operational rules.
sales practice rules.
Regulators help capital markets do all of
the following except:
Ensure investors are treated equally
reduce investment risk.
allocate capital to productive use.
ensure investors are treated equally.
Net capital rules are put in place to pre-
vent all of the following except:
losses experienced by firms
global financial contagion.
losses experienced by firms.
the use of excessive leverage.
The processes by which regulations are
developed:
are similar across the globe. Vary widely from informal to formal
vary widely from informal to formal.
are standardised across the various ju-
risdictions within a country.
A store owner recently turned down a
substantial cash offer for his store and
the land on which the store is located.
Although the store owner considered the
offer to be fair, he wanted to continue
running the business. This year, his busi-
ness has incurred costs for merchandise
sold; wages paid to workers, including The opportunity cost of the land and the
his own salary; utilities; and property tax- store
es. When determining the business's ac-
counting profit for the period, he is most
likely to correctly exclude which of the
following:
his own salary.
property taxes.
