CFA Level 01 Real Exam Questions and
Explanations
Unauthorized reproduc0on or sale may be punishable as a viola0on of copyright law.
,
,01. Sumita Khatri wrote a research report and followed the necessary due diligence steps before
sharing the report with her client. It turned out that there was a mistake in the report. This
was pointed out by her client. Khatri apologized and re-submi@ed the corrected report. Did
Khatri violate any CFA InsFtute Standards?
A. No.
B. Yes, rela0ng to performance presenta0on.
C. Yes, rela0ng to misconduct.
Answer: A
Based on the informa0on provided, it doesn't seem that there is a clear viola0on of the
CFA Ins0tute Standards. If the mistake was uninten0onal and not due to negligence or a
lack of due diligence on Khatri's part, it may not necessarily cons0tute a viola0on.
02. Aryana Reid, CFA, is a private wealth manager. She writes a popular blog called “Aryana’s
Investments” that has several thousand subscribers. The objecFve of the blog is to a@ract
new clients; every post is also sent as an e-mail to its subscribers. The blog posts are usually a
detailed analysis about her investment recommendaFons and acFons. Recently, Reid issued a
sell recommendaFon for Jubilant Inc. However, a few days aSer publishing her iniFal
recommendaFon, she decides to change the recommendaFon from sell to buy based on some
new informaFon. In order to comply with the CFA InsFtute Standards, which of the following
is the most appropriate method for disseminaFng the change in investment
recommendaFon?
A. Publish the post and send it as a mail to the blog subscribers.
B. Publish the post, send a mail to blog subscribers and email her clients simultaneously.
C. Email her clients first.
Answer: B
This approach ensures that the informa0on is made available to all interested par0es at
the same 0me, avoiding any poten0al conflicts of interest or preferen0al treatment of
specific clients.
03. Kent Miller is an investment adviser at UBN Investments, who is registered to take Level I of the
CFA Exam. He meets with Carrie HarPord, a new client of the firm, who has just moved her
account from Northern Investment Bank. She tells Miller that she has read about deriva0ves
and would like to invest in them. Miller explains the upside poten0al and downside risks of
some strategies with deriva0ves and recommends protec0ve put for her porPolio. To be
consistent with the CFA Ins0tute Standards, Miller should:
, A. determine HarPord’s needs, objec0ves, and tolerance for risk before making a
recommenda0on.
B. explain to HarPord in detail about the characteris0cs of his firm and the investment
vehicles it offers, including the nature of the industry.
C. explained to HarPord his recent candidacy in the CFA Program, and its importance within
the investment community.
Answer: A
According to the CFA Ins0tute Standards, investment advisers must gather sufficient
informa0on about their clients' needs, objec0ves, and risk tolerance before making any
investment recommenda0ons. This ensures that the recommenda0ons are suitable for the
client's individual circumstances and align with their investment goals. Therefore, op0on A
reflects the best prac0ce in terms of compliance with the CFA Ins0tute Standards.
04. JusFn Zoghlin, CFA, was hired as a wealth manager to manage the $2 billion estate of a family
in Oklahoma a year ago. He was given the flexibility to choose his working hours. When
Zoghlin took the job, he served as the President of his religious community that conducted
social welfare programs on a regular basis. In addiFon, he managed the investments for his
large extended family. He did not get paid for his religious community acFvity or the family
investments. Seeing the impressive returns he generated, his friends persuaded him to
manage their investments, as well.
Now, a year later, he has stopped serving the religious community. He manages investments for
non-family members, but charges 10% of the por`olio value as his fee. Zoghlin has not informed
his employer of any of these acFviFes.
With regard to which of the business acFviFes, has Zoghlin least likely violated the CFA InsFtute
Standards of Professional Conduct?
A. Serving the religious community.
B. Managing non-family investments.
C. Managing family investments.
Answer: A
Serving the religious community without payment is less likely to raise concerns related to
conflicts of interest or impairment of independence and objec0vity compared to managing
non-family investments and charging fees for those services. However, it's important to note
that the specific details of Zoghlin's involvement with the religious community are not
provided, so a comprehensive assessment would require more informa0on.
Explanations
Unauthorized reproduc0on or sale may be punishable as a viola0on of copyright law.
,
,01. Sumita Khatri wrote a research report and followed the necessary due diligence steps before
sharing the report with her client. It turned out that there was a mistake in the report. This
was pointed out by her client. Khatri apologized and re-submi@ed the corrected report. Did
Khatri violate any CFA InsFtute Standards?
A. No.
B. Yes, rela0ng to performance presenta0on.
C. Yes, rela0ng to misconduct.
Answer: A
Based on the informa0on provided, it doesn't seem that there is a clear viola0on of the
CFA Ins0tute Standards. If the mistake was uninten0onal and not due to negligence or a
lack of due diligence on Khatri's part, it may not necessarily cons0tute a viola0on.
02. Aryana Reid, CFA, is a private wealth manager. She writes a popular blog called “Aryana’s
Investments” that has several thousand subscribers. The objecFve of the blog is to a@ract
new clients; every post is also sent as an e-mail to its subscribers. The blog posts are usually a
detailed analysis about her investment recommendaFons and acFons. Recently, Reid issued a
sell recommendaFon for Jubilant Inc. However, a few days aSer publishing her iniFal
recommendaFon, she decides to change the recommendaFon from sell to buy based on some
new informaFon. In order to comply with the CFA InsFtute Standards, which of the following
is the most appropriate method for disseminaFng the change in investment
recommendaFon?
A. Publish the post and send it as a mail to the blog subscribers.
B. Publish the post, send a mail to blog subscribers and email her clients simultaneously.
C. Email her clients first.
Answer: B
This approach ensures that the informa0on is made available to all interested par0es at
the same 0me, avoiding any poten0al conflicts of interest or preferen0al treatment of
specific clients.
03. Kent Miller is an investment adviser at UBN Investments, who is registered to take Level I of the
CFA Exam. He meets with Carrie HarPord, a new client of the firm, who has just moved her
account from Northern Investment Bank. She tells Miller that she has read about deriva0ves
and would like to invest in them. Miller explains the upside poten0al and downside risks of
some strategies with deriva0ves and recommends protec0ve put for her porPolio. To be
consistent with the CFA Ins0tute Standards, Miller should:
, A. determine HarPord’s needs, objec0ves, and tolerance for risk before making a
recommenda0on.
B. explain to HarPord in detail about the characteris0cs of his firm and the investment
vehicles it offers, including the nature of the industry.
C. explained to HarPord his recent candidacy in the CFA Program, and its importance within
the investment community.
Answer: A
According to the CFA Ins0tute Standards, investment advisers must gather sufficient
informa0on about their clients' needs, objec0ves, and risk tolerance before making any
investment recommenda0ons. This ensures that the recommenda0ons are suitable for the
client's individual circumstances and align with their investment goals. Therefore, op0on A
reflects the best prac0ce in terms of compliance with the CFA Ins0tute Standards.
04. JusFn Zoghlin, CFA, was hired as a wealth manager to manage the $2 billion estate of a family
in Oklahoma a year ago. He was given the flexibility to choose his working hours. When
Zoghlin took the job, he served as the President of his religious community that conducted
social welfare programs on a regular basis. In addiFon, he managed the investments for his
large extended family. He did not get paid for his religious community acFvity or the family
investments. Seeing the impressive returns he generated, his friends persuaded him to
manage their investments, as well.
Now, a year later, he has stopped serving the religious community. He manages investments for
non-family members, but charges 10% of the por`olio value as his fee. Zoghlin has not informed
his employer of any of these acFviFes.
With regard to which of the business acFviFes, has Zoghlin least likely violated the CFA InsFtute
Standards of Professional Conduct?
A. Serving the religious community.
B. Managing non-family investments.
C. Managing family investments.
Answer: A
Serving the religious community without payment is less likely to raise concerns related to
conflicts of interest or impairment of independence and objec0vity compared to managing
non-family investments and charging fees for those services. However, it's important to note
that the specific details of Zoghlin's involvement with the religious community are not
provided, so a comprehensive assessment would require more informa0on.
