Free CFA Level I Equity Investments Practice Questions (2026)

Sample Questions

Question 1 Easy

A market is informationally efficient if security prices:

Solution

B is correct. Informational efficiency means prices respond quickly and without systematic bias to new information, so that at any time price fully reflects the relevant information set. Rapid adjustment prevents traders from profiting from the information, and unbiased adjustment means prices neither systematically overshoot nor undershoot.

Question 2 Medium

Enterprise value (EV) is calculated as:

Solution

A is correct.

Enterprise value = Market value of equity (market cap) + Market value of debt + Preferred stock + Minority interest - Cash and cash equivalents. The simplified formula is Market cap + Total debt - Cash. EV represents the total cost of acquiring a firm.

Question 3 Hard

A dark pool is best described as a trading venue that:

Solution

B is correct.

Dark pools are alternative trading systems (ATS) that do not display order information (bids and offers) to the public before execution. They are designed for institutional investors to execute large block trades without revealing their intentions and causing adverse price impact.

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