CFA Level 1 Exam Preparation Material | CFA Level 1 Exam

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Prepare for the CFA Level 1 CFA Level 1 exam with CertQueen's independently developed study resources. Review important concepts, practice scenario-based questions, and use clear explanations to identify areas that require further study.

Question#1

Silverio Arvantis is an aggressive and quick- silver analyst with Foresi Associates, an investment advisory firm. Silverio, a freshly minted Ph.D. from the University of Chicago, recently formulated an algorithm for selecting the portfolio weights in relatively new high- tech stocks. The algorithm evaluates 43 different variables to choose the investments and as such, is fairly complex in nature. Not wishing to drown his clients in esoteric terms like "martingale" and "stochastic transformation," Silverio writes up a short report which touches only briefly on the major characteristics of the model. Instead, he focuses on the performance of the model on past market data, which is absolutely sterling. Based on these tests, Silverio recommends 4 stocks for immediate purchase. Silverio has:

A. violated Standard V (B) - Performance Presentation by relying on past data.

B. not violated any standards.

C. violated Standard IV (

D. 2) - Research Reports by failing to disclose sufficient details about the algorithm.

E. violated Standard IV (

F. 2) - Research Reports by failing to distinguish opinion from fact.

Explanation:
Standard IV (A.2) requires the member to disclose details of the reasoning and logic behind the recommendations so that investors can follow and challenge it and analyze the risks inherent in the recommended strategy. While Silverio does not have to delve into excessive technical details or reveal any proprietary formulas, the report must contain explanations for the recommendations. By omitting these, he has violated Standard IV (A.2). Note, however, that there is no evidence that he has confused opinion with fact.

Question#2

Which measure may be interpreted as a measure of prospective growth rates in earnings and dividends that are expected by the market?

A. Price/Earning Ratios

B. Dividend Yield

C. Return on Assets

D. Payout Ratio

E. Return on Equity

F. Debt to Equity

Explanation:
P/E ratios must be compared across an entire industry to view relative valuations. It is useful to compare P/E ratios for individual firms with the industry average P/E ratio and P/E ratios of other firms in the same industry.

Question#3

The post- audit is used to

A. eliminate potentially profitable but risky projects.

B. all of these answers are correct.

C. review cash flow forecasts.

D. stimulate management to improve operations and bring results into line with forecasts.

E. none of these answers are correct.

Explanation:
The two main purposes of the post- audit are to improve forecasts and improve operations. Management is putting their reputations on the line when forecasting an investment, and they will strive to improve operations to bring results into line with forecasts.

Question#4

A firm has an expected dividend payout ratio of 50%, and an expected dividend growth rate of 6% per year.
What is the firm's Price/Earnings ratio if the appropriate discount rate is 10% per year?

A. 50

B. Not able to compute with the above data.

C. 12.5

D. 125

Explanation:
Value = 0.50/(0.10- 0.06) = 12.5.

Question#5

Which of the following are considered when applying generally accepted accounting principles.

A. When income is recognized as earned.

B. How assets are measured.

C. All of these answers are correct.

D. When expenses and losses accrue.

E. When liabilities are incurred.

Explanation:
The rules or standards of accounting determine such matters as how assets are measured, when liabilities are incurred, when income is recognized as earned, and when expenses and losses accrue.

Exam Code: CFA Level 1
Q & A: 3960 Q&As Updated: Oct 07,2026

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What This CFA Level 1 Study Resource Helps You Do

Review Key Concepts

Review the technologies, products, processes, and practical skills covered by the current CFA Level 1 exam objectives.

Practice Scenario-Based Questions

Work through independently developed questions designed to strengthen your understanding of technical scenarios and decision-making.

Identify Knowledge Gaps

Use your results and the provided explanations to find weaker areas and focus your study more effectively.

How to Use This CFA Level 1 Preparation Material

Review the Exam Scope

Start by reviewing the topics covered by the CFA Level 1 exam. Compare them with the official exam objectives to understand the required technologies, operational tasks, and practical skills, then identify the areas that deserve the most attention.

Practice Independently

Complete a focused set of practice questions for each topic. On your first attempt, avoid referring to notes, answers, or other study resources so that you can evaluate your current understanding more accurately.

Study the Explanations

Review the answers and explanations after completing each practice session. Understand why the correct option is appropriate for the given scenario and why the other options may be incorrect or less suitable.

Close Knowledge Gaps

Keep track of incorrect answers, unfamiliar concepts, and weaker knowledge areas. Review these topics using official documentation and practical experience, then answer the related questions again to reinforce your understanding and monitor your progress.

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Exam Code: CFA Level 1
Q & A: 3960 Q&As
Updated: Oct 07,2026