The CFA Institute, an awards body for investment professionals, recently announced the pass rate for its latest round of exams. As Funds Europe reported, a huge – or should that be ‘only’ – 56% passed the Level III examination, or some 35,518 candidates from around the globe.
At Level 1, the pass rate was lower: 43%. There were 79,507 candidates at this first stage of the CFA programme.
How do you think you might do at this starter phase (if you haven’t already done it)?
Funds Europe took a look at some of the Level 1 sample questions, kindly provided by the institute itself.
Would we know how to advise Colin Gifford (see first question) about his stock analysis so he didn’t violate professional standards? Of course we would.
We invite readers to have ago themselves at these three questions. You’ve got about a week. Your time starts now.
• Colin Gifford, CFA, is finalizing a monthly newsletter to his clients, who are primarily individual investors. Many of the clients’ accounts hold the common stock of Capricorn Technologies. In the newsletter, Gifford writes, “Based on the next six month's earnings of $1.50 per share and a 10% increase in the dividend, the price of Capricorn's stock will be $22 per share by the end of the year.”
Regarding his stock analysis, the least appropriate action Gifford should take to avoid violating any CFA Institute Standards of Professional Conduct would be to:
- A separate fact from opinion.
- B include earnings estimates.
- C identify limitations of the analysis.
• If the distribution of the population from which samples of size n are drawn is positively skewed and given that the sample size, n, is large, the sampling distribution of the sample means is most likely to have a:
- A mean smaller than the mean of the entire population.
- B variance equal to that of the entire population.
- C distribution that is approximately normal.
• Eileen Fisher, CFA, has been a supervisory analyst at SL Advisers for the past 10 years. Recently, one of her analysts was found to be in violation of the CFA Institute Standards of professional Conduct. Fisher has placed limits onthe analyst's activities and is now monitoring all of his investment activities.
Although SL did not have any compliance procedures up to this point, to avoid future violations, Fisher has put in place procedures exceeding industry standards.
Did Fisher most likely violate any CFA Institute Standards of Professional Conduct?
- A No, because she has taken steps to ensure the violations will not be repeated by the analyst
- B Yes
- C No, because she is taking steps to implement compliance procedures that are more than adequate
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