CFA Foundations Trouble Questions with correct Answers
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CFA
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CFA (CFA)
Q. Which objective of documentation is fulfilled when documents ensure thoroughness and consistency of action, thus allowing a company to function more efficiently and effectively? - Answer- Organizing. B is correct. Organising is the objective of documentation that is fulfilled when documents ensu...
cfa foundations trouble questions with correct answers
q which objective of documentation is fulfilled when documents ensure thoroughness and consistency of action
thus allowing a company to fun
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CFA Foundations Trouble Questions
with correct Answers
Q. Which objective of documentation is fulfilled when documents ensure thoroughness
and consistency of action, thus allowing a company to function more efficiently and
effectively? - Answer- Organizing. B is correct. Organising is the objective of
documentation that is fulfilled when documents ensure thoroughness and consistency of
action, thus allowing a company to function more efficiently and effectively. A is
incorrect because educating is achieved when documents inform or provide instruction.
C is incorrect because formalising is achieved when documents establish roles,
deliverables, and obligations.
Q. An employee handbook that outlines travel reimbursement guidelines is best
classified as a(n): - Answer- C is correct. An employee handbook that outlines travel
reimbursement guidelines is an associated document that employees would refer to in
order to determine which travel expenses may or may not be reimbursed. A is incorrect
because an ad hoc document is typically informal. Because an employee handbook
usually describes policies and procedures, it is more likely to be a standardised
document rather than an ad hoc document. B is incorrect because a derived document
comes into existence because of other documents. In this context, an expense claim
form would be a better example of a derived document.
Q. The CFA Institute Code of Ethics requires members to:
protect clients' interests at all times and in all situations.
encourage competitors to increase their levels of competence.
ensure investment recommendations are similar across an industry. - Answer- B is
correct. The CFA Institute Code of Ethics requires CFA Institute members and
candidates to maintain and improve their professional competence and even strive to
improve the competence of others in the investment field. A is incorrect. An investment
professional must put the interests of preserving the integrity of the market before a
client's interests if the client's actions will harm the market. C is incorrect. The Code of
Ethics does not require investment recommendations to be similar across an industry. It
does require investment professionals to use independent judgment when making
investment recommendations.
Q. An employee is assigned a complicated task by her supervisor but believes she does
not have the technical skills to carry it out. The employee should:
refuse to carry out the assignment.
carry out the work as best as she can.
get a co-worker to do it and take credit for the work. - Answer- A is correct. Employees
are expected to carry out their work with competence and care. If an employee cannot
, do so because she lacks the necessary skill set, she should refuse the assignment until
such time that she develops the needed skills. A co-worker can help with the
assignment, but the employee should not take credit for work done by others. B is
incorrect. The employee should not carry out the assignment without the proper skill set
as he has an obligation to work with competence and care. C is incorrect. A co-worker
can help with the assignment but the employee should not take credit for work done by
others.
Q. Regulators often seek public consultation prior to the implementation of new
regulations in order to:
educate consumers and service providers on the new rules.
improve the final rules by undertaking a cost-benefit analysis.
ensure that the new rules are favourable to those likely to be affected. - Answer- B is
correct. When drafting new regulations or rules, a regulator will often seek comments
from the public on costs, benefits, and suggested alternative rules prior to
implementation in order to improve the quality of the final rules and to ensure that the
benefits of the final rules outweigh the costs of their implementation.
Q. Regulators help capital markets do all of the following except:
reduce investment risk.
allocate capital to productive use.
ensure investors are treated equally. - Answer- C is correct. Regulators ensure that
investors are treated fairly but not equally. Investors have different risk and return
requirements so they should not all be treated the same. Regulators also help to reduce
investor risk and facilitate an efficient market for capital to be raised by companies for
productive use through the implementation of guidelines, rules, and regulations. A is
incorrect because regulators help to reduce investor risk through the implementation of
guidelines, rules and regulations. B is incorrect because regulators facilitate an efficient
market for capital to be raised by companies for productive use through the
implementation of guidelines, rules and regulations.
Q. The broadest-based measure of a nation's inflation rate is provided by the:
implicit GDP deflator.
consumer price index (CPI).
producer price index (PPI). - Answer- A is correct. The implicit GDP deflator is the
current dollar GDP divided by constant dollar GDP and is the broadest-based measure
of a nation's inflation rate. B is incorrect. CPI measures the price change from year to
year of a typical basket of goods purchased by consumers. C is incorrect. PPI
measures the average selling price of goods in the economy received by producers.
Unlike CPI it includes investment goods but excludes services.
Q. A US merchant purchases wine from a vineyard outside of Paris. The wine is
transported to the United States on a Canadian ship. The Canadian ship is insured by
an insurance company incorporated in England. An export would be reported by:
France only.
France, England, and Canada.
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