[Demo] Mock Online - CFA level 1

For firms to claim compliance with the GIPS standards they most likely must:

• A. take responsibility for their claim of compliance and maintaining that compliance.
• B. hire an independent third party to test a sample of their composites.
• C. increase the consistency and quality of the firm’s compliant presentations.

An investment fund manager has a finance degree and over 20 years of experience working for a top-ranking asset management firm. Based only on this information, could the investment fund manager most likely claim to be part of a profession?

• A. Yes, a person working in this industry requires specialized knowledge and skills.
• B. No.
• C. Yes, as part of the industry, he is providing a service to others.

Leng Bo, CFA, is a bond portfolio manager for individual investors. Last year, a client whose portfolio is limited to investment-grade bonds approved Bo’s purchase of a below investment grade bond. Because yields in the high grade fixed-income markets declined, Bo subsequently decides to enhance this client’s portfolio by investing in several additional bonds with ratings one or two notches below investment grade. The investment strategy implemented by Bo most likely violated which of the following CFA Institute Standards of Professional Conduct?

• A. Suitability
• B. Communications with Clients
• C. Independence and Objectivity

Dimitri Kuznetsov, CFA, is a portfolio manager and holds shares of Barnikoff Limited and Matric Ventures in all client portfolios. Both companies have upcoming annual general meetings scheduled for the same day. The management of Barnikoff proposes to change its financial year-end from September to December, while Matric Ventures proposes to enter into a high-risk venture. The proxy voting policy clause in all client investment management agreements managed by Kuznetsov states, “When voting proxies provides a cost benefit to the client, the manager must vote a proxy.” With regard to the proxy votes for Matric and Barnikoff, Kuznetsov would least likely violate CFA Institute Standard III(A)–Loyalty, Prudence, and Care if he votes:

• A. with management.
• B. only the Matric proxy.
• C. only the Barnikoff proxy.

Which of the following statements related to why the GIPS standards were created is least likely correct? GIPS standards were created to:

• A. provide clients certainty in what is presented and allow them to make reasonable comparisons.
• B. identify a set of ethical principles for firms to follow in calculating and presenting historical investment results.
• C. establish a standardized, industry wide approach for investment firms to follow.

Which of the following statements does not accurately represent the objectives of Global Investment Performance Standards (GIPS)? The GIPS standards:

• A. ensure consistent, accurate investment performance data in areas of reporting, records, marketing, and presentations.
• B. obtain global acceptance of calculation and presentation standards in a fair, comparable format with full disclosure.
• C. promote fair competition amongst investment management firms in all markets requiring common fee structures.

• A. 17.56.
• B. 19.59.
• C. 18.58.

The information provided by a balance sheet item is limited because of uncertainty regarding:

• A. measurement of its cost or value with reliability.
• B. the change in current value following the end of the reporting period.
• C. the probability that any future economic benefit will flow to or from the entity.

• A. 1,466,490.
• B. 1,451,500.
• C. 1,448,650.

The power of a hypothesis test is:

• A. equivalent to the level of significance.
• B. the probability of not making a Type II error.
• C. unchanged by increasing a small sample size.