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WorksheetsCFA ESG Chapter 1, 2
Total questions: 30
Worksheet time: 45mins
Of the following, what is the most appropiate definition of ESG Investing?
Approach to manage companies that explicy acknowledges the relevance of ESG in corporate decision.
Approach to manage assets where investors acknowledges the relevance of ESG in corporate decision.
Approach to manage assets where investors acknowledges the relevance of ESG in investing decision
Approach to manage assets where investors acknowledges the relevance of sustaniable investing.
Incorporating ESG into investment process will most likely result in which of the options below?
Both volatility and return will we reduced
Both volatility and return will be increased
Return will be increased, volatility will be reduced
Of the following, choose the most appropiate definition of the social factor
Related to appropriate governance measures for public listed companies.
Related to board diversity in multinationals
Related to lives of humans (management human resources, local communities and clients).
Related to ecological factors
Of the following, which of the following is not likely a form of ESG Investment?
Valuation Investment
Impact Investment
Ethical Investment
Value-Based Investment
The efficiency of engagement is least likely dependent on...
The scale of ownership
The quality of engagement
Whether divestment is known to be a possible sanction
The amount of "Short-Interest" in the name
Of the following, which investment style is least likely to utilize negative screening?
Impact Investment
Ethical Investment
Value-driven investment
Faith-based investment
Which of the following is least likely to be an example of a social factor?
Human Rights
Working Conditions
Solid Adification
Local Protests
Prof. Arthur Pigou introduced the concept of externalities. Which answer best describes this concept?
Consumption of a product does not reflect its true benefit for the society as a whole.
Production of a product does not reflect its true cost or benefit for the society as a whole.
Production and consumption of a product does not reflect its true cost or benefit for society as a whole.
Consumption of a product does not reflect its true cost or benefit for the society as a whole.
SDG's have been established by the UN. How many SDGs are there?
16
27
17
18
Which of the following investment approaches focuses on enhancing the long term value of an investment portfolio?
Exclusion
Impact Investing
ESG Investing
Conventional financial investing
Which of the following ESG Investments addresses the bottom of the pyramid (BOP)?
Green Bonds
Micro-finance Bonds
Fund investing in Smart grid technology
The ESG Integration can have a material impact on a company, resulting in...
Reduced efficiency
Reduced costs
Increase negative externalities
Previous 3 are correct
Which of the following statements regarding externalities is most accurate?
When externalities are negative, private costs are lower than societal costs.
When externalities are positive, private costs are lower than societal cost.
Internalization of externalities does not affect companies' financial performance
Externalities are only affected by environmental factors.
Greenwashing refers to:
countries exporting hazardous waste to other countries
companies making misleading claims about their environmental practices
companies introducing substances into the environment that are harmful
Which of the following statements is true about best-in-class investment?
It involves only selecting companies that overcome a defined ranking hurdle
It cannot be used to maintain key characteristics, such as regional and sectorial diversification of an index
It refers to selecting companies that fall under a sustainability-related theme
It refers to allocating capital to assets that best mitigate climate change
Of the following, please select the investing style most aligned with the statement "... involves seeking to mitigate environment, social and governance practices in order to protect value"
Impact investing
Responsible investing
Sustainable Investing
Thematic Investing
In his course, Ismael learns that institutional investors have several options for incorporating ESG considerations into their investment decisions and active ownership. Of the following, which one is least likely a typical method used by institutional investors to reflect ESG considerations in investment approaches?
Integrating ESG into investment decision-making
Engaging actively with companies on ESG matters
Encouraging employees to support charities
As a part of their UN PRI efforts, Juan is discovering the importance of active ownership, which requires shareholder voting and engagement. His company, a long-short hedge fund, traditionally has not engaged much with its holdings. As he digs deeper into the topic, he finds that the efficiency of shareholder engagement depends on a variety of factors. Which of the following factos has the least likely impact on the efficiency of shareholder engagement?
The scale of ownership (individual or collective initiative)
The quality of the engagement dialogue
The scale of short-interest in the name
Best-in-Class involves..
Negative screening approach
Positive and negative screening approach
Selecting only the companies that overcome a defined ranking hurdle
A socially-oriented investor would most likely focus on which investment or projects? Choose all that apply:
1) Microfinancing
2) Health and safety projects
3) Access to medicine
4) Access to nuclear energy
1,2,3
1, 3
3,4
1, 2, 3, 4
Henrik works as a business developer for an ESG consultant. He contacts Camilo, who works as a trustee for an Austrian Pension Fund, as he believes Camilo should have interest in incorporating ESG investments for a number of reasons.
Which one is not a reason for incorporate ESG investments in a Pension Fund?
Pension fund trustees should act in the interest in the pension fund members; members have expressed an interest in social and environmental impact.
Trustees of a pension fund risk legal action if they fail to consider risks related to climate change.
Trustees, as a ultimate beneficiaries of pension funds, should act in their best interest.
As a part of her master's thesis, Eleonora conducts a market research on different sustainable investment strategies. What is the most widely used sustainable investment strategy worldwide?
ESG integration
Best-in-class
Negative Screening
Positive Screening
The UN General Assembly issued a famous report to propose long-term solutions for bringing about sustainable development. What is the name of the report?
Freshfields Report
Brundlant Report
Stern Report
Which regions have the highest AUM in sustainable and responsible investing?
APAC
Australia and New Zeland
USA and Europe
USA and Canada
Which of the following statements is true of asset managers?
They are the legal owner of Assets Under Management
They are required to act as a fiduciary to clients
They are free in their investment decisions
They are the counterparty to transactions or derivatives.
Some institutional investors are inherently more exposed to risks. As such, they are more likely to incorporate ESG. Which of the following is most exposed tho physical risk due to climate change?
Sovereign Wealt Funds
Life insurance companies
Non-Life insurance companies (P&C)
According to Global Sustainable Investment Alliance (GSIA), corporate engagement and shareholder action were the predominant strategies in 2020 in which country below?
US
Euope
Japan
Canada
Why was the UNGC's "Who Cares Wins" report a significant defining moment?
The Brundtland Report, also called "Who Cares Wins", it was the first report introducing the sustainability concept.
It was the first report introducing the concept of externalities
The report introduced the term ESG and encourages financial institutions to integrate ESG into capital markets.
Pension funds as institutions are driven by 3 internal players. Which of the following is not one of them?
Trustees
Board of directors
Members
Which of the following statement is correct?
Impact investments accepts submarkets returns
Impact investments only focuses on environmental return
Social investment accepts submarket returns
Social investment only focus on social return.
