CFA Practice Questions for level 1 with Answers and Explanations

CFA Practice Questions for level 1 | Answers and Explanations

Welcome to our CFA Level 1 Practice Questions test! This test is designed to help you prepare for the actual CFA exam by testing your knowledge on a variety of topics. The test consists of 10 multiple choice questions with answers and explanations provided at the end. Try your best to answer each question and use the explanations to improve your understanding of the material. Good luck!​
The CFA Level 1 exam is the first of three levels in the CFA Program. It covers a broad range of topics in finance, including ethical and professional standards, quantitative methods, economics, financial reporting and analysis, corporate finance, equity investments, fixed income, derivatives, and alternative investments. The exam consists of 240 multiple-choice questions, divided into two three-hour sessions. Passing the CFA Level 1 exam is a key milestone in becoming a Chartered Financial Analyst (CFA) and is widely recognized as a standard of excellence in the investment industry. Candidates must demonstrate a strong understanding of fundamental investment principles and a commitment to ethical conduct in order to successfully complete the exam.

CFA Practice Questions for level 1 with Answers and Explanations

1. Which of the following is NOT a component of the DuPont analysis?






2. An analyst is considering the following two investments:


Investment A: Expected return = 12%, Standard deviation = 8%
Investment B: Expected return = 15%, Standard deviation = 12%

If the correlation coefficient between the two investments is 0.6, what is the expected return and standard deviation of a portfolio that is equally invested in A and B?





3. Which of the following is a violation of the CFA Institute Standards of Professional Conduct?






4. Which of the following is NOT a feature of a traditional defined benefit pension plan?






5. A company has issued bonds with a coupon rate of 8% and a yield to maturity of 10%. Which of the following is true?






6. Which of the following is a disadvantage of using the dividend discount model (DDM) to value a company?






7. Which of the following types of risk is NOT addressed by diversification?






8. Which of the following is NOT a characteristic of an efficient market?






9. Which of the following is an example of a contingent convertible bond?






10. Which of the following types of financial statements provides a snapshot of a company's financial position at a specific point in time?








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