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Test Prep CFA-Level-I Exam Questions
CFA® Level I Chartered Financial Analyst (Page 79 )

Updated On: 28-Feb-2026
Page 79 of 793
PDF with 3963 Questions

Under Standard III (E) - Responsibilities of Supervisors - which of the following are NOT responsible for maintaining appropriate supervision when they are in a supervisory role?

  1. AIMR members
  2. CFA charterholders
  3. None of these answers
  4. Level I CFA candidates
  5. CFA candidates

Answer(s): C

Explanation:

Standard III (E) states the responsibility of AIMR members, CFA charterholders and candidates for the CFA designation to take steps to prevent persons acting under their supervision from violating the law or the Code and Standards.



Standard ________ states that the financial analyst must use particular care to maintain independence and objectivity in relationships with issuers of securities.

  1. I (B.2)
  2. III (1)
  3. IV (A.3)
  4. II (C.4)
  5. None of these answers

Answer(s): C

Explanation:

Standard IV (A.3) - Independence and Objectivity - ensures that clients have the benefit of work and opinions unaffected by any potential conflict of interest that may adversely affect their judgment. Members should maintain their independence by being wary of "perks" offered by external sources such as corporations, issuers, underwriters and brokers.



Data Droid manages several investment accounts and directs most of the client transactions through Lore's brokerage firm. Lore provides him with excellent, reliable research, though his commissions are higher than industry standards. The research is used to manage all the client accounts. Data has just been approached by the Troy brokerage firm, which is a newcomer in the business. While this firm does not provide any research, it charges commissions that are significantly lower than those charged by Lore. If Data decides to stay with Lore's brokerage firm

  1. has not violated the code since he has a long-standing relationship with Lore.
  2. he has violated the code of ethics, which requires him to keep the expenses to a minimum.
  3. has not violated the code if Lore's research justifies the additional expenses.
  4. has violated the code by violating the Prudent Man Rule.

Answer(s): C

Explanation:

Standard IV (B.1) - Fiduciary Duties



Standard IV (A.3) relates to two major components and is titled ________ and Objectivity.

  1. None of these answers
  2. Impartiality
  3. Justice
  4. Autonomy
  5. Independence

Answer(s): E

Explanation:

Standard IV (A.3) - Independence and Objectivity, states that members shall use reasonable care and judgment to achieve and maintain independence and objectivity in making investment recommendations or taking investment action.



When a composite of international portfolios is created, firms should separate portfolios that are allowed to use currency ________ from portfolios that may not use ________, unless the use of currency ________ is considered immaterial. (Same answer for all three spaces)

  1. selection
  2. hedging
  3. exchanges
  4. swaps
  5. strategy

Answer(s): B

Explanation:

If a firm makes significant use of currency hedging when allowed, it should separate portfolios that do not allow such hedging into a different composite and use a different benchmark for the highly hedged and unhedged composites. Similarly, portfolios with materially different risk exposures do not belong in the same composite.






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