CFA Practice Questions

Our Question Bank contains more than 3,000 exam-style questions to get you better prepared

Develop Exam Skills with Practice Questions

After you’ve done some intensive reading of the CFA Level I materials and study notes, the next step is to test your knowledge and understanding of each chapter. It is not enough to read and understand the course material to pass the exam. Research shows that practicing what you’ve learned by working on exam-style questions improves your chances of passing on your first attempt.

Preparing for the CFA exam also means knowing what to expect during the actual test and familiarizing yourself with the types of questions you’re likely to encounter.

This is why we’ve included more than 3,000 questions in our question bank. The questions cover every concept in each of the chapters you’ll be tested on and are adjusted regularly over time to be consistent with the current CFA standards and difficulty level. Join the 5,000 candidates who register yearly for our free resources available only on our platform.

Performance Tracking Lets you Find your Strengths and Weaknesses

The Level I CFA exam consists of 10 topics covering a broad range of skills in a large volume of material. Testing your knowledge in each specific area by using the practice questions helps you understand where your strengths and weaknesses are. You can track your performance over time and monitor your progress with our FREE performance tracking tool.

Performance tracking is part of our complete set of analytics tools that gives you invaluable insights into your performance, including the ability to compare your result with more than 10,000 users worldwide. Adjust your study plan according to the given results and improve your performance by revising the topics that you need to master. Efficient studying begins with knowing which topics you need to put more effort into so as to maximize your chances of passing.

Example Questions

Question 1 - Ethical and Professional Standards

A social network company announces its plan to introduce additional features that would increase its revenues. Matt H. estimated that the expected increase in annual earnings could be $5 billion. The estimate was based on logical assumptions and after a careful evaluation of historical performances. He issues a report stating ''Based on the fact that earnings will increase by $5 billion, I recommend a BUY for the stock''. Has Matt H. violated any Standard?

A) No, since the calculation is based on logical assumptions and a careful assessment of historical performances.

B) Yes, Matt has violated Standard V (B): Communication with Clients and Prospective Clients.

C) Yes, Matt has violated the Standard IV (A): Loyalty.


Question 2 - Ethical and Professional Standards

Bill Kesler works as an analyst in Minecraft Investment Advisors. He is attending a conference call with the CEO of another company in the cafeteria of his office but the phone is not on speaker mode. During the call, he took notes of the earnings projections on loose sheets but forgot to take them along with him. The loose sheets are found by the portfolio managers and they traded stocks on behalf of their clients on the basis of the earnings projections mentioned in the notes. Who has violated the Standards?

A) Bill Kesler

B) The portfolio managers

C) Bill Kesler and the portfolio managers


Question 3 - Quantitative Methods

You are presented with 2 investment opportunities and must choose the one with the greater present value: A lump-sum of $2 million or an annuity with 25 payments of $250,000 a year with the first payment starting today. The interest rate is 9% per year compounded annually. Which one will you choose?

A) The annuity

B) The lump-sum

C) There's no difference between the two options


Question 4 - Quantitative Methods

A technical analyst finds that ABC stock has a head and shoulders pattern with the peak being at $75, the neckline at $66 and shoulders around $70. On today's trading session, the stock breaches $66 to the downside. What is the most probable outcome the analyst predicts for the stock?

A) The stock will rebound to $70

B) The stock will rebound to $75

C) The stock will keep going down to $57


Question 5 - Quantitative Methods

As the degrees of freedom increases and the t-statistic approaches towards the z-statistic, the tails of the distribution become?

A) Thicker

B) Thinner

C) No change


Question 6 - Economics

Repurchase agreements are included in which money supply measures?

A) M2

B) Both M2 and M3

C) M3


Question 7 - Economics

What will happen to the aggregate demand (AD) curve if the government cuts taxes?

A) The AD curve will shift leftward.

B) There will be an upward movement along the AD curve.

C) The AD curve will shift rightward.


Question 8 - Economics

A country has the following characteristics:

Exports of goods and services $6,000,000
Investment income received from foreigners $1,000,000
Imports of goods and services $3,000,000
Investment income payment made to foreigners $2,000,000

What is this country's account balance?

A) $0

B) $2,000,000

C) $12,000,000


Question 9 - Financial Reporting and Analysis

Which of the following are NOT part of other comprehensive income?

1. Exchange differences on translating foreign operations
2. Issuance of equity shares
3. Actuarial gains/losses
4. Loss from sale of machinery

A) 2 and 4

B) 2 and 3

C) 1 and 4


Question 10 - Financial Reporting and Analysis

Mojo Contractors entered into a 3-year contract with Jojo LLC for constructing their office space. During the second year of the contract, Mojo Contractors estimated that the total revenue from the contract would be $500 million and the total costs (incurred plus expected) would be $580 million. Mojo Contractors follows the completed contract method. Which of the following would be the correct accounting treatment?

A) No accounting treatment.

B) Provision to be created for expected loss amounting to $80 million.

C) Loss incurred until the date of the completion of the contract should be recorded in the books.


Question 11 - Financial Reporting and Analysis

Mylcos Company uses a perperual inventory system. Calculate the value of the inventory from the following data using the weighted average cost method, given that the transactions took place in the order mentioned below.

Opening inventory 7 units @ $500 per unit
Purchase 5 units @ $600 per unit
Purchase 3 units @ $400 per unit
Sale 14 units -
Purchase 2 units @ $900 per unit
Sale 1 unit -

A) $1,800

B) $1,609

C) $1,542


Question 12 - Financial Reporting and Analysis

Calculate financial leverage ratio from the following data.

Property, Plant and Equipment (PPE) $342,999
Accounts Receivable $129,898
Inventory $129,898
Bonds issued at 7% $100,000
Current liabilities $308,898

Note: The interest due on bonds has not been paid and not been recorded in the books yet.
Note 2: There is no typo error in this question, The values of Inventories and Accounts receivable are the same.

A) 3.11

B) 3.22

C) 1.45


Question 13 - Financial Reporting and Analysis

An accountant is analyzing the accounts of a Belgian chocolate firm. The information regarding the cost of its ice cream plant is given in the following table. Calculate the amount of impairment loss if the Belgian firm reports under IFRS.

Book value of Plant $400,000
Acc. Depreciation $25,000
Fair Value $370,000
Selling Cost $15,000
Value in Use $360,000
Expected Future Cash Flow $350,000

A) $15,000

B) $25,000

C) $40,000


Question 14 - Corporate Finance

Birmingham Corporation is launching a new product with a social media marketing campaign that will cost $2,000,000. To finance the project, Birmingham's CEO gathered the following information:

Required return on equity 15%
Before-tax required return on debt 7%
ABC Corp's tax bracket 20%

If the CEO decides to issue $1,500,00 in new debt and $500,000 in common stocks, then the marginal weighted average cost of capital (WACC) is closest to:

A) 7.20%

B) 7.95%

C) 9.05%


Question 15 - Corporate Finance

A 91-day Treasury Bill has a holding period yield of 2.3%. What is its annual yield on a bond-equivalent basis?

A) 9.10%

B) 9.20%

C) 9.23%


Question 16 - Portfolio Management

Bruce Craig is in the business of trading steel in Chicago, which he inherited from his father one month ago. His financial adviser notes the following aspects of his situation:

- He is 24 years old;
- His investment horizon is 10-20 years;
- His primary objective for investing is aggressive growth;
- His business returns are not stable as he is not being able to take prudent business decisions.

Given the aforementioned information, which of the following statements is correct?

A) Craig has a low ability to take risk, but a high willingness to take risk.

B) Craig has a high ability to take risk, but a low willingness to take risk.

C) Craig has a high ability to take risk, but a high willingness to take risk.


Question 17 - Equity Investments

The expected P/E ratio of a stock is 10 and the actual P/E ratio is 10.8. What can we say about the stock?

A) The stock is overvalued.

B) The stock is undervalued.

C) We can not say anything about the stock.


Question 18 - Fixed Income

A 3-year bond offers a 7% coupon rate with interests paid annually. Assuming the following sequence of spot rates, the price of bond is closest to:

Time to Maturity Spot Rate (%)
1 4
2 5
3 5.5

A) 102.48

B) 106.74

C) 104.24


Question 19 - Derivatives

Which of the following is the riskiest single-option transaction?

A) Buying an at-the-money call

B) Writing an at-the-money call

C) Buying an at-the-money put


Question 20 - Alternative Investments

Which of the following is the appropriate name for the provision which requires managers to return periodic incentive fees if the investors received less than 80% of the profits generated by the fund?

A) Clawback provision

B) Loss reimbursement clause

C) Committed capital clause



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