1|Page
FSA LEVEL 1 EXAM WITH QUESTIONS AND
DETAILED ANSWERS THE LATEST UPDATED EXAM
BANK INCLUDING EXPERT VERIFIED SOLUTIONS
FOR A SURE PASS
Why are investors demanding ESG info? - ANSWER: To generate alpha (above
market returns)
To better assess risk
To evaluate the predictability of investment outcomes
Why do companies want qualitative and quantitative ESG info about themselves? -
ANSWER: To improve near, medium, and long term performance
To manage risks and opportunities
To effectively communicate with investors and lower the cost of capital
What can identifying sustainability KPIs and managing them do for a company? -
ANSWER: Identify and mitigate risks
Reduce costs
Optimize efficiencies
Increase market share and revenue growth with new products or services
What other institutions demand ESG information? - ANSWER: International,
national, and local policy-based initiatives (government regulators) pass
recommendations, guidance, and regulatory requirements
Securities exchanges
Industry associations
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Why was disclosure the basis for regulatory reform after the 1930s market crash? -
ANSWER: It promotes transparency
Protects investors
Promotes good corporate governance
Enables informed investor decisions
How has "Materiality" been defined over time? - ANSWER: Traditionally focuses
on info that impacts financials and investor decision-making
Used to create guidelines for companies for disclosure
Focusing only on what's material prevents companies from undue reporting burden
What was the basis for accounting in the 1930s, and what is it now? - ANSWER:
It was historical cost counting
Then if became a range of unique methodologies for each company that were not
comparable (fragmentation)
Ultimately accounting focused on decision-useful information, and became
standardized through standards like IFRS and GAAP.
What are examples of intangible assets? - ANSWER: Intellectual capital
Customer relationships
Brand value
Other "soft" assets
What does the rise in intangible assets in percentage of total S&P market value
mean for corporate disclosure? - ANSWER: Much important information is not
captured in financial disclosure
There is an information gap relating to intangible assets
FSA LEVEL 1 EXAM WITH QUESTIONS AND
DETAILED ANSWERS THE LATEST UPDATED EXAM
BANK INCLUDING EXPERT VERIFIED SOLUTIONS
FOR A SURE PASS
Why are investors demanding ESG info? - ANSWER: To generate alpha (above
market returns)
To better assess risk
To evaluate the predictability of investment outcomes
Why do companies want qualitative and quantitative ESG info about themselves? -
ANSWER: To improve near, medium, and long term performance
To manage risks and opportunities
To effectively communicate with investors and lower the cost of capital
What can identifying sustainability KPIs and managing them do for a company? -
ANSWER: Identify and mitigate risks
Reduce costs
Optimize efficiencies
Increase market share and revenue growth with new products or services
What other institutions demand ESG information? - ANSWER: International,
national, and local policy-based initiatives (government regulators) pass
recommendations, guidance, and regulatory requirements
Securities exchanges
Industry associations
, 2|Page
Why was disclosure the basis for regulatory reform after the 1930s market crash? -
ANSWER: It promotes transparency
Protects investors
Promotes good corporate governance
Enables informed investor decisions
How has "Materiality" been defined over time? - ANSWER: Traditionally focuses
on info that impacts financials and investor decision-making
Used to create guidelines for companies for disclosure
Focusing only on what's material prevents companies from undue reporting burden
What was the basis for accounting in the 1930s, and what is it now? - ANSWER:
It was historical cost counting
Then if became a range of unique methodologies for each company that were not
comparable (fragmentation)
Ultimately accounting focused on decision-useful information, and became
standardized through standards like IFRS and GAAP.
What are examples of intangible assets? - ANSWER: Intellectual capital
Customer relationships
Brand value
Other "soft" assets
What does the rise in intangible assets in percentage of total S&P market value
mean for corporate disclosure? - ANSWER: Much important information is not
captured in financial disclosure
There is an information gap relating to intangible assets
