10 exam-style questions with answers and explanations, straight from our 1,035-question bank. Tap an answer to check yourself. When you're ready, take the scored version in the free practice test.
The CFA exam has 180 questions and runs 4 hours 30 minutes.
These 10 free CFA questions are organized by exam domain, so you can see how each part of the Chartered Financial Analyst blueprint is tested. Reveal the answer and explanation under each question.
An analyst covering a company receives an all-expenses-paid trip to the company's mine site aboard the company's private jet, with lodging arranged and paid for by the company. To best comply with the CFA Institute Standard on Independence and Objectivity, the analyst should:
Correct answer: B - Pay for their own commercial travel and lodging when practical
A portfolio manager receives a hot new-issue IPO allocation and fills the orders of family-member accounts and a personal account before filling suitable discretionary client accounts. This action most directly violates the Standard addressing:
Correct answer: A - Priority of Transactions
A firm wishes to claim compliance with the Global Investment Performance Standards (GIPS) for only its strongly performing institutional equity division, while excluding its retail division. Under the GIPS standards, this approach is:
Correct answer: D - Not permitted, because compliance must be firm-wide
A CFA charterholder learns highly material, non-public information about a pending acquisition from a friend who sits on the target's board. The information is not yet public. According to the Standards, the charterholder is least appropriately acting when they:
Correct answer: C - Trade the securities because they did not solicit the information
The one-year interest rate is 5% in Country A and 2% in Country B. According to covered interest rate parity, and ignoring transaction costs, Country A's currency will most likely trade at a forward:
Correct answer: C - Discount, offsetting the higher interest rate it offers
During a period of rising prices and stable inventory quantities, a company reporting under US GAAP uses the LIFO method rather than FIFO. Compared with FIFO, using LIFO will most likely result in:
Correct answer: D - Higher cost of goods sold and lower net income
A retailer reports days of inventory on hand of 60, days of sales outstanding of 45, and days of payables outstanding of 30. Its cash conversion cycle, in days, is closest to:
Correct answer: B - 75
An equity analyst estimates that a stock will pay a dividend of $2.00 in one year, that dividends will grow at a constant 9% indefinitely, and that the required return on equity is 13%. Using the Gordon growth model, the intrinsic value per share is closest to:
Correct answer: D - $54.50
Two analysts value the same firm. Analyst A uses free cash flow to the firm (FCFF); Analyst B uses free cash flow to equity (FCFE). To arrive at consistent estimates of equity value, the appropriate discount rates are:
Correct answer: B - The WACC for FCFF and the required return on equity for FCFE
A bond has a modified duration of 7.0 and a convexity of 65. If its yield to maturity rises by 100 basis points, the estimated percentage change in the bond's price, including the convexity adjustment, is closest to:
Correct answer: D - −6.68%
The CFA exam also covers these domains. Drill them in the full free practice test:
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