CFA Investment Foundations Mock Exam
(Questions and answers) LATEST 2024
CORRECT QUESTIONS AND ANSWERS
GRADE A.
Proprietary trading is most likely carried out by:
dealers.
brokers.
settlement agents. - ANSWER >>> Dealers,
Dealers act as principals, so they are deemed proprietary traders.
Dealers trade on behalf of their own accounts and use their own
capital to make markets. B is incorrect. Brokers arrange deals
between the buyers and the sellers. They do not trade for their own
accounts. C is incorrect. Settlement agents provide services to clear
and settle deals after they have been negotiated.
Q. Globalisation in the investment industry is associated with the
growing tendency of investors:
to look outside their local market for investment opportunities.
to prefer to hedge the risks of foreign investment, such as currency
risk.
in smaller countries to compete more effectively with those in larger
countries - ANSWER >>> to look outside their local market for
investment opportunities.
A is correct. Globalisation occurs as investors develop a growing
tendency to look outside their local markets for better portfolio
diversification and higher returns. B is incorrect. The decision to hedge
various risks will depend on the individual investor's needs and
beliefs, not the extent of globalisation. C is incorrect. Globalisation
,gives all investors more opportunities but does not favour one group
over another.
The goal of all economic systems is to:
efficiently allocate scarce resources to their most productive uses.
produce enough goods and services to satisfy the desires of all
consumers.
support government spending on public services, such as education,
defence, and infrastructure. - ANSWER >>> efficiently allocate scarce
resources to their most productive uses
The goal of all economic systems is the efficient allocation of scarce
resources to their most productive uses. People have an unlimited
desire for goods and services, but resources are limited. Economic
systems must address three questions: (1) What should be produced?
(2) How should it be produced? (3) Who should receive what is
produced? The goal is to answer these questions in a way that best
satisfies consumers' needs
An individual who helps buyers and sellers find and trade with one
another is a(n):
broker.
dealer.
auditor. - ANSWER >>> Broker
Securities regulations are created by:
legislative bodies.
individual investors.
government agencies. - ANSWER >>> Government Agencies
The CFA Institute Code of Ethics requires members to:
protect clients' interests at all times and in all situations.
encourage competitors to increase their levels of competence.
,ensure investment recommendations are similar across an industry. -
ANSWER >>> encourage competitors to increase their levels of
competence.
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.
carry out the work as best as she can.
get a co-worker to do it and take credit for the work. - ANSWER >>>
Refuse to carry out the assignment
Investment advisers have an ethical obligation to:
protect their own interests.
exercise independent judgment.
sell products with the highest fees. - ANSWER >>> Exercise
independent judgment
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.
other client accounts.
the account if managed by a competitor. - ANSWER >>> Their own
assets
During a job interview, a potential employer described the CFA
Institute Code of Ethics as "a set of principles establishing rules
governing ethical behaviour required of investment professionals
toward their clients and employers". Does this description fully capture
the Code of Ethics' requirement to act in an ethical manner?
Yes
, No, the Code of Ethics also requires ethical behaviour when dealing
with potential clients
No, the Code of Ethics also requires ethical interaction with all capital
market participants - ANSWER >>> No, the code of ethics also
require ethical interaction with all capital market participants
Regulators often seek public consultation prior to the implementation
of new regulations in order to:
educate consumers and service providers on the new rules.
improve the final rules by undertaking a cost-benefit analysis.
ensure that the new rules are favourable to those likely to be affected.
- ANSWER >>> Improve the rules by undertaking a cost-benefit
analysis
Regulations prohibiting front running are types of:
trading rules.
operational rules.
sales practice rules. - ANSWER >>> Trading rules
Regulators help capital markets do all of the following except:
reduce investment risk.
allocate capital to productive use.
ensure investors are treated equally. - ANSWER >>> Ensure
investors are treated equally
Net capital rules are put in place to prevent all of the following except:
global financial contagion.
losses experienced by firms.
the use of excessive leverage. - ANSWER >>> losses experienced by
firms
The processes by which regulations are developed:
(Questions and answers) LATEST 2024
CORRECT QUESTIONS AND ANSWERS
GRADE A.
Proprietary trading is most likely carried out by:
dealers.
brokers.
settlement agents. - ANSWER >>> Dealers,
Dealers act as principals, so they are deemed proprietary traders.
Dealers trade on behalf of their own accounts and use their own
capital to make markets. B is incorrect. Brokers arrange deals
between the buyers and the sellers. They do not trade for their own
accounts. C is incorrect. Settlement agents provide services to clear
and settle deals after they have been negotiated.
Q. Globalisation in the investment industry is associated with the
growing tendency of investors:
to look outside their local market for investment opportunities.
to prefer to hedge the risks of foreign investment, such as currency
risk.
in smaller countries to compete more effectively with those in larger
countries - ANSWER >>> to look outside their local market for
investment opportunities.
A is correct. Globalisation occurs as investors develop a growing
tendency to look outside their local markets for better portfolio
diversification and higher returns. B is incorrect. The decision to hedge
various risks will depend on the individual investor's needs and
beliefs, not the extent of globalisation. C is incorrect. Globalisation
,gives all investors more opportunities but does not favour one group
over another.
The goal of all economic systems is to:
efficiently allocate scarce resources to their most productive uses.
produce enough goods and services to satisfy the desires of all
consumers.
support government spending on public services, such as education,
defence, and infrastructure. - ANSWER >>> efficiently allocate scarce
resources to their most productive uses
The goal of all economic systems is the efficient allocation of scarce
resources to their most productive uses. People have an unlimited
desire for goods and services, but resources are limited. Economic
systems must address three questions: (1) What should be produced?
(2) How should it be produced? (3) Who should receive what is
produced? The goal is to answer these questions in a way that best
satisfies consumers' needs
An individual who helps buyers and sellers find and trade with one
another is a(n):
broker.
dealer.
auditor. - ANSWER >>> Broker
Securities regulations are created by:
legislative bodies.
individual investors.
government agencies. - ANSWER >>> Government Agencies
The CFA Institute Code of Ethics requires members to:
protect clients' interests at all times and in all situations.
encourage competitors to increase their levels of competence.
,ensure investment recommendations are similar across an industry. -
ANSWER >>> encourage competitors to increase their levels of
competence.
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.
carry out the work as best as she can.
get a co-worker to do it and take credit for the work. - ANSWER >>>
Refuse to carry out the assignment
Investment advisers have an ethical obligation to:
protect their own interests.
exercise independent judgment.
sell products with the highest fees. - ANSWER >>> Exercise
independent judgment
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.
other client accounts.
the account if managed by a competitor. - ANSWER >>> Their own
assets
During a job interview, a potential employer described the CFA
Institute Code of Ethics as "a set of principles establishing rules
governing ethical behaviour required of investment professionals
toward their clients and employers". Does this description fully capture
the Code of Ethics' requirement to act in an ethical manner?
Yes
, No, the Code of Ethics also requires ethical behaviour when dealing
with potential clients
No, the Code of Ethics also requires ethical interaction with all capital
market participants - ANSWER >>> No, the code of ethics also
require ethical interaction with all capital market participants
Regulators often seek public consultation prior to the implementation
of new regulations in order to:
educate consumers and service providers on the new rules.
improve the final rules by undertaking a cost-benefit analysis.
ensure that the new rules are favourable to those likely to be affected.
- ANSWER >>> Improve the rules by undertaking a cost-benefit
analysis
Regulations prohibiting front running are types of:
trading rules.
operational rules.
sales practice rules. - ANSWER >>> Trading rules
Regulators help capital markets do all of the following except:
reduce investment risk.
allocate capital to productive use.
ensure investors are treated equally. - ANSWER >>> Ensure
investors are treated equally
Net capital rules are put in place to prevent all of the following except:
global financial contagion.
losses experienced by firms.
the use of excessive leverage. - ANSWER >>> losses experienced by
firms
The processes by which regulations are developed:
