CFA Level 1 Sample Questions and Answers Free PDF Download

Download Free Sample Questions and Answers for CFA Level 1. These Sample Questions were prepared by CFA Qualified Professional. We also recommend students to view our earlier posts on CFA Level 1 Books and CFA Level 1 Syllabus. The Sample Questions Provided below are for Ethical and Professional Standards, which has an exam weight of 15%. As students might be aware that, Ethics is one of the important topics in entire CFA Level 1 Course. Also go through CFA After CA and Salary Details. Students can also find Sample Questions for other CFA subjects from our CFA Section. Users are advised not to use these Sample Questions for any commercial purpose.

Sample Questions and Answers CFA Level 1 Free PDF

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Question 1: CFA Level 1 Sample Questions

An “access” person is also known as –

  1. Ombudsman
  2. Fiduciary
  3. Covered person

Right Answer: Covered person

Explanation: Access or covered persons have knowledge of actual investment recommendations or action even if they are pending. The firm‘s definition of access (covered person) should be wide enough to cover all people who have that knowledge.

Question 2 Gifts: CFA Level 1 Sample Questions

Ramesh is invests capital for one of his clients. Ramesh attends an analyst meet where the issuer distributes designer watches to all the attendees. Ramesh initially denies the gift but finally accepts it after much insistence from the client and after seeing that everyone is accepting it without fuss. Ramesh can:

  1. Not accept gifts from issuers of securities under any circumstances
  2. Accept modest gifts
  3. Accept any gift, as long as it is disclosed

Right Answer: Accept modest gifts

Explanation: According to Standard I B – Independence and Objectivity – modest gifts that do not exceed prescribed limits and entertainment are acceptable but special care should be taken by member analysts and investment managers to resist lavish gifts such as tickets, favors, job referrals and so on, which may be tied in with subtle pressures for favors possibly detrimental to clients.

Question 3 AIMR: CFA Level 1 Sample Questions

An AIMR member:

I. Must report any criminal activity to the appropriate legal or regulatory authority

II.  May be held responsible for any illegal activity he associates himself with

III. Can be held liable for violations it he does not take actions to dissociate himself from them

  1. I, II, III
  2. II and III only
  3. II only

Right Answer: II and III only

Explanation: Standard I does not require a member to report the illegal activity to the appropriate regulatory authorities though it may be prudent to do so in many cases if it is evident that the activity is illegal.

Question 4 Standards: CFA Level 1 Sample Questions

Jignesh is a portfolio analyst at Sedelweiss., a leading investment bank. Sedelweiss’s corporate policy prohibits its employees from trading in IPOs even if they are not being underwritten by Sedelweiss. Recently, a fast-growing internet firm, Sodel Solutions, announced that it was going public. Jignesh friend, Lalit, told him that he could get her bid in for a few shares ol the IPO. The size of the deal was very small, amounting to less than a couple of thousand dollars. Jignesh went ahead and bought the shares but did not think it was necessary to inform his supervisor about it. He;
  1. Violated Standard ID – Professional Misconduct – by violating company policy
  2. Did not violate the AIMR code of conduct even though he violated the company policy since the size of her transaction was extremely small.
  3. Violated Standard IV – Disclosure of Conflicts to Employer – by violating company policy

Right Answer: Violated Standard IV – Disclosure of Conflicts to Employer – by violating company policy

Explanation: Sedelweiss policy is designed to prevent any conflicts or even appearances of conflicts of interest when its employees trade in capital markets. If Jignesh wants to trade in a particular IPO, he needs to obtain special permission from Sedelweiss Compliance department {and such permission may or may not be granted by Compliance). Without such an exception, Jignesh’s behavior is a violation of Standard IV – Disclosure of Conflicts to Employer.

Question 5 Conflicts: CFA Level 1 Sample Questions

Geet Seth an analyst with an investment advisory firm changed the recommendation on Uniball. Inc.’s stock from hold to sell 12 days ago. This recommendation was published in the firm’s newsletter that came out three days after this announcement. Geet has just given his broker instructions to liquidate his personal holdings of Uniball. Geet has:
  1. Violated Standard VI (A) – Disclosure of Conflicts to Clients and Prospects.
  2. Violated Standard VI (B) – Priority of Transactions
  3. Not violated any standard of AIMR code

Right Answer: Not violated any standard of AIMR code

Explanation: Because Geet has allowed sufficient time for dissemination of the change in recommendation, he is free to carry out personal transactions. Also, since the recommendation is to sell the stock, there is no personal conflict in the situation. Note that it would be a violation of Standard VI(A) – Disclosure of Conflicts to Clients and Prospects – if the recommendation were to buy the stock and Geet had failed to reveal information about his personal holdings.