1、 2013 Level I Mock Exam: Afternoon Session The afternoon session of the 2013 Level I Chartered Financial Analyst (CFA) Mock Examination has 120 questions. To best simulate the exam day experience, candidates are advised to allocate an average of 1.5 minutes per question for a total of 180 minutes (3
2、 hours) for this session of the exam. Questions Topic Minutes 118 Ethical and Professional Standards 27 1932 Quantitative Methods 21 3344 Economics 18 4568 Financial Statement Analysis 36 6978 Corporate Finance 15 7990 Equity Investments 18 9196 Derivative Investments 9 97108 Fixed Income Investment
3、s 18 109114 Alternative Investments 9 115120 Portfolio Management 9 Total: 180 【梦轩考资】 QQ106454842 专业提供CFA FRM全程高清视频+讲义Questions 1 through 18 relate to Ethical and Professional Standards 1. Carlos Cruz, CFA, is one of two founders of an equity hedge fund. Cruz manages the funds assets, and the other
4、co-founder, Brian Burkeman, CFA, is responsible for fund sales and marketing. Cruz notices the most recent sales material used by Burkeman indicates assets under management are listed at a higher value than the current market value. Burkeman justifies the discrepancy by stating recent market decline
5、s account for the difference. In order to comply with the CFA Institute Standards of Professional Conduct, Cruz should least likely take which of the following actions? A. Correct the asset information and provide updates to prospective clients. B. Report the discrepancy to CFA Institutes Profession
6、al Conduct Program. C. Provide a disclaimer within marketing material indicating prices are as of a specific date. Answer = B “Guidance for Standards I-VII”, CFA Institute 2013 Modular Level I, Vol. 1, Reading 2, Standard I (A) Knowledge of the Law, Guidance Study Session 1-2-c Recommend practices a
7、nd procedures designed to prevent violations of the Code of Ethics and Standards of Professional Conduct. B is correct because a violation of Standard I (A) Knowledge of the Law is likely to occur unless the asset base information is corrected. Cruz has yet to violate any CFA Institute standards, so
8、 he need not report a violation. If Cruz does not take action, he will be in violation of the standards, and at that point, he would need to report this violation because Standard I (A) applies; the member should know his conduct may contribute to a violation of applicable laws, rules, regulations,
9、or the Code and Standards related to the inaccurate sales materials. Cruz should seek to have the information corrected and accurate information provided to prospective clients. It may also be prudent to seek the advice of legal counsel. 2. Linda Chin, CFA, is a member of a political group advocatin
10、g less governmental regulation in all aspects of life. She works in a country where local securities laws are minimal and insider trading is not prohibited. Chins politics are reflected in her investment strategy, where she follows her countrys mandatory legal and regulatory requirements. Which of t
11、he following actions by Chin is most consistent with the CFA Institute Standards of Professional Conduct? A. Follow the CFA Code and Standards. B. Continue her current investment strategy. C. Disclose her political advocacy to clients. Answer = A “Guidance for Standards I-VII”, CFA Institute 2013 Mo
12、dular Level I, Vol. 1, Reading 2, Standard I (A) Knowledge of the Law, Standard II (A) Material Nonpublic Information, Guidance 【梦轩考资】 QQ106454842 专业提供CFA FRM全程高清视频+讲义Session 1-2-c Recommend practices and procedures designed to prevent violations of the Code of Ethics and Standards of Professional C
13、onduct. A is correct because Standard I (A) Knowledge of the Law requires members and candidates to comply with the more strict law, rules, or regulations and follow the highest requirement, which in this case would be the CFA Institute Standards of Professional Conduct. Standard II (A) Material Non
14、public Information would also apply because members and candidates who possess material nonpublic information that could affect the value of an investment must not act or cause others to act on the information. Disclosure that she meets local mandatory legal requirements, not the more strict law rul
15、e or regulation of the Code and Standards, would not excuse the member from following the Code and Standards. 3. Wouter Duyck, CFA, is the sole proprietor of an investment advisory firm serving several hundred middle-class retail clients. Duyck claims to be different from his competitors because he
16、conducts research himself. He discloses that to simplify the management of all these accounts, he has created a recommended list of stocks, from which he selects investments for all of his clients based on their suitability. Duycks recommended list of stocks is obtained from his primary broker, who
17、has completed due diligence on each stock. Duycks recommended list least likely violates which of the following CFA Institute Standards of Professional Conduct? A. Fair Dealing B. Misrepresentation C. Diligence and Reasonable Basis Answer = A “Guidance for Standards I-VII”, CFA Institute 2013 Modula
18、r Level I, Vol. 1, Standard I (C) Misrepresentation, Guidance, Standard III (B) Fair Dealing, Guidance, Standard V (A) Diligence and Reasonable Basis, Guidance Study Session 1-2-b Distinguish between conduct that conforms to the Code and Standards and conduct that violates the Code and Standards. A
19、is correct because Standard III (B) Fair Dealing concerns the fair treatment of clients when making investment recommendations or taking investment action, but there is no indication the adviser has discriminated against any clients in regard to his recommendations because he invests all clients in
20、the same universe of stocks. The adviser has violated Standard I (C) Misrepresentation with his research, which is not independently created and instead relies upon information provided by his broker. This is contrary to the adviser telling clients he does his own independent investment research. In
21、 addition, the adviser has violated Standard V (A) Diligence and Reasonable Basis because he has not made reasonable and diligent efforts to determine if the third partys research is sound. 4. Lisa Hajak, CFA, specialized in research on real estate companies at Cornerstone Country Bank for 20 years.
22、 Hajak recently started her own investment research firm, Hajak Investment 【梦轩考资】 QQ106454842 专业提供CFA FRM全程高清视频+讲义Advisory. One of her former clients at Cornerstone asks Hajak to update a research report she wrote on a real estate company when she was at Cornerstone. Hajak updates the report, which
23、she had copied to her personal computer without the banks knowledge, and replaces references to the bank with her new firm, Hajak Investment Advisory. Hajak also incorporates the conclusions of a real estate study conducted by the Realtors Association that appeared in the Wall Street Journal. She ci
24、tes the Journal as her source in her report. She provides the revised report free of charge along with a cover letter for the banks client to become a client of her firm. Concerning the reissued research report, Hajak least likely violated the CFA Institute Standards of Professional Conduct because
25、she: A. solicited the banks client. B. did not obtain consent to use the bank report. C. did not cite the actual source of the real estate study. Answer = A “Guidance for Standards I-VII”, CFA Institute 2013 Modular Level I, Vol. 1, Standard I (C) Misrepresentation, Guidance, Standard IV (A) Loyalty
26、, Guidance, Standard V (C) Record Retention, Guidance Study Session 1-2-b Distinguish between conduct that conforms to the Code and Standards and conduct that violates the Code and Standards. A is correct because soliciting the banks client did not violate Standard IV (A) Loyalty because the manager
27、 is no longer an employee of the bank and there is no indication she obtained the client information from bank sources. The member, however, has violated Standard V (C) Record Retention because when she left the bank, she took the property of the bank without express permission to do so. In addition
28、, the analyst violated Standard I (C) Misrepresentation by creating research materials without attribution, which is demonstrated when the manager adds to the new report a real estate study she saw in the Wall Street Journal, referencing the Journal only. In all instances, a member or candidate must
29、 cite the actual source of the information. If she does not obtain the report and review the information, the manager runs the risk of relying on secondhand information that may misstate facts. Best practice would be either to obtain the complete study from its original author and cite only that aut
30、hor or to use the information provided by the intermediary and cite both sources. 5. Tonya Tucker, CFA, is a financial analyst at Bowron Consolidated. Bowron has numerous subsidiaries and is actively involved in mergers and acquisitions to expand its businesses. Tucker analyzes a number of companies
31、, including Hanchin Corporation. When Tucker speaks with the CEO of Bowron, she indicates many of the companies she has looked at would be attractive acquisition targets for Bowron. After her discussion with the CEO, Tucker purchases 100,000 shares of Hanchin Corporation at $200 per share. Bowron do
32、es not have any pre-clearance procedures, so the next time she meets with the CEO, Tucker mentions she owns shares of Hanchin. The CEO thanks her for this information but does not ask for any details. Two weeks later, Tucker sees a company-wide email from the CEO announcing Bowrons acquisition of Ha
33、nchin for $250 a share. In regard to her purchase of Hanchin stock, Tucker least likely violated the CFA Institute Standards of Professional Conduct concerning: 【梦轩考资】 QQ106454842 专业提供CFA FRM全程高清视频+讲义A. Loyalty. B. Priority of Transactions. C. Material Nonpublic Information. Answer = C “Guidance for
34、 Standards I-VII”, CFA Institute 2013 Modular Level I, Vol. 1, Standard II (A) Material Nonpublic Information, Guidance, Standard IV (A) Loyalty, Standard VI (B) Priority of Transactions Study Session 1-2-b Distinguish between conduct that conforms to the Code and Standards and conduct that violates
35、 the Code and Standards. C is correct because there is no indication the analyst had access to material nonpublic information and was in violation of Standard II (A) Material Nonpublic Information. Specifically, Tucker did not have information concerning any decision by Bowron to acquire Hanchin sto
36、ck because she is not a part of the decision-making team at Bowron, which determines the companies it plans to take over. The analyst had indicated numerous companies were viable options for take over, and she did not single out any one company in particular. 6. When a client asks her how she makes
37、investment decisions, Petra Vogler, CFA, tells the client she uses mosaic theory. According to Vogler, the theory involves analyzing public and nonmaterial nonpublic information, including the evaluation of statements made to her by company insiders in one-on-one meetings where management discusses
38、new earnings projections not known to the public. Vogler also gathers general industry information from industry experts she has contacted. Vogler most likely violates the CFA Institute Standards of Professional Conduct because of her use of: A. industry expert information. B. one-on-one meeting inf
39、ormation. C. nonmaterial nonpublic information. Answer = B “Guidance for Standards I-VII”, CFA Institute 2013 Modular Level I, Vol. 1, Standard II (A) Material Nonpublic Information Study Session 1-2-b Distinguish between conduct that conforms to the Code and Standards and conduct that violates the
40、Code and Standards. B is correct because a violation of Standard II (A) Material Nonpublic Information is likely to occur when using information that is selectively disclosed by corporations to a small group of investors, analysts, or other market participants. Earnings estimates given in a one-on-o
41、ne meeting would likely be considered material and nonpublic information. Information made available to analysts remains nonpublic until it is made available to investors in general. Under the mosaic theory, it is acceptable to use information from industry contacts as long as the 【梦轩考资】 QQ106454842
42、 专业提供CFA FRM全程高清视频+讲义analyst uses appropriate methods to arrive at her conclusions. Additionally, it is acceptable to use nonmaterial nonpublic information in her analysis, and this use is not a violation of Standard II (A) Material Nonpublic Information. 7. Lin Liang, CFA, is an investment manager
43、and an auto industry expert. Last month, Liang sent securities regulators an anonymous letter outlining various accounting irregularities at Road Rubber Company. Shortly before he sent the letter to the regulators, Liang shorted Road stock for his clients. Once the regulators opened an investigation
44、, which Liang learned about from his sources inside the company, Liang leaked this information to multiple sources in the media. When news of the investigation became public, the share price of Road immediately dropped 30%. Liang then covered the short positions and made $5 per share for his clients
45、. Liang least likely violated which of the CFA Institute Standards of Professional Conduct? A. Misconduct B. Market Manipulation C. Priority of Transactions Answer = C “Guidance for Standards I-VII”, CFA Institute 2013 Modular Level I, Vol. 1, Standard I (A) Knowledge of the Law, Standard I (D) Misc
46、onduct, Standard II (B) Market Manipulation, Standard VI (B) Priority of Transactions, Guidance Study Session 1-2-b Distinguish between conduct that conforms to the Code and Standards and conduct that violates the Code and Standards. C is correct because the member has engaged in information-based m
47、anipulation of Road stock in violation of Standard II (B) Market Manipulation and Standard I (D) Misconduct. Members and candidates must refrain from “pumping up” (or down, in this case) the price of an investment by issuing misleading positive (or negative) information for their or their clients be
48、nefit. The member has not violated Standard VI (B) Priority of Transactions because this standard concerns client investment transactions having priority over member or candidate investment transactions and is not applicable here. 8. Sanjay Gupta, CFA, is interviewed by the First Faithful Church to
49、manage the churchs voluntary retirement plans equity portfolio based upon his superior return history. Each church staff member chooses whether to opt in or out of the retirement plan according to his or her own investment objectives. The plan trustees tell Gupta that stocks of companies involved in the sale of alcohol, tobacco, gambling, or firearms are not acceptable investments given the objectives and constrai
