CFA Sample Exam

Pages: 57 (18610 words) Published: January 23, 2013
Chartered Financial Analyst®

2011 CFA Level 1 Sample Exam Questions and Answers
• 2011 CFA Level 1 Sample Exam Version 1-2

2011 CFA Level 1 Sample Exam

2011 Level 1 Sample Exam Volume 1
SS1 -Ethics and Professional Standards 1. Abasi Hasina, CFA, signed an employment contract with a non-compete clause restricting him from working for a competitor for three years after leaving the employer, an investment bank. After one year, Hsaina. quits his job for a position with an investment bank in a city across the country. The new job pays twice as much as the old one. Lawyers with whom he consulted determined the non-compete clause was a violation of human rights and thus illegal, so he took the offer. Did Hssina most likely violate the CFA Insitute Code of Ethics? A. Yes B. No, the non-compete clause was considered illegal. C. No, the non-compete clause is void since the new position is geographically distant. 2. Benefits of compliance with the CFA Institute Global Investment Performance Standards(GIPSa) least likely include: A. strengthening of internal controls. B. Participation in competitive bidding. C. Elimination of in-depth due diligence for investors. 3. Who is most likely responsible for claiming and maintaining compliance with CFA Institute Global Investment Performance Standards (GIPSb)? A. An independent third party B. The firm claiming compliance C. The risk management department 4. Mariam Musa, CFA, Head of Compliance at Dunfield Brokers, questions her colleague Omar Kassim, a CFA Candidate and a research analyst, about his purchase of shares in a company for his own account immediately before he published a "buy" . recommendation. He defends his actions by stating he has done nothing wrong because Dunfield doesn't have any personal trading policies in place. The CFA Institute Code of Ethics and Standards of Professional Conduct were most likely violated by: A. only Musa. B. only Kassim C. both Musa and Kassim. 5. Zhao Xuan, CFA, is a sell side investment analyst. While at a software industry

2011 CFA Level 1 Sample Exam

conference, Xuan heras rumors that Green Run Software may have falsified its financial results, When she returns to her office, Xuan conducts a thorough analysis of Green Run. Based on her research, including discussions with some of Greeri Gun's customers, Xuan is convinced that Green Run's reported 50 percent increase in net income in recent quarters is completely fictitious. So far, however, Xuan is the only analyst that is suspicious about the company's reported earning. According to the CFA Institute Code of Ethics and Standards of Professional Conduct, the least appropriated action for Xuan is to: A. report her suspicions to Green Run's management. B. do nothing, until her analysis is supported by other analysts. C. Recommend that her clients sell their Green Run shares immediately. 6. Richard Cardinal, CFA, is the founder of Volcano Capital Research(VCR), an investment management firm whose sole activity is short selling. Cardinal seeks out companies whose stocks have had large price increases. Cardinal also pays several Washington lobbying firms to update him immediately on any legislative or regulatory changes that may impact his target companies. Cardinal sells short those target companies that he estimates are near the peak of their sales and earnings and that his Washington sources identify as facing legal Or regulatory challenges. Immediately after he sells a stock, Cardinal conducts a public relations campaign to disclose all of the negative information he has gathered on the company, even if the information is not yet public, Cardinal then encourages shareholders to file widely publicized shareholder class-action lawsuits that seej^ damages because the stock dropped in price. Which of Cardinal's following actions is least likely to be in violation of the CFA Institute Standards Professional Conduct? A. Selling stock short B. Trading on information from...
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