Sample Questions
Question 1
Easy
The way Marisol's report presents the 18% backlog growth figure is best described as:
Solution
B is correct. The 18% figure is Marisol's own extrapolation from the Quantiv cash flow path, yet the report asserts that the backlog 'will grow 18% per year through 2029, lifting free cash flow to $310 million.' Nothing labels the number an estimate, a projection, or an assumption, and no surrounding language signals uncertainty, so a client reading the report cannot tell that the figure is analysis rather than a known outcome. Standard V(B) requires members to distinguish clearly between fact and opinion in presenting investment analysis and recommendations; a forward-looking growth rate that the analyst herself derived is opinion and must be identified as such.
Question 2
Medium
Marisol's 2 April cleanup of the Halvorsen working files most likely:
Solution
C is correct. Standard V(C) requires members to develop and maintain the records that support their investment analyses, recommendations, and actions. Marisol deleted precisely those records: the Quantiv output file, the spreadsheet holding the backlog build-up, the Northbay memo, her notes from two management calls, and the e-mail exchange with the vendor. What she kept was the conclusion, not the evidence, and she kept it on a personal laptop even though such supporting records are the property of BAM. Neither the silence of BAM's compliance manual nor the absence of a local regulatory period relieves her; where no statute or regulation applies, the recommended practice is to retain supporting records for seven years.
Question 3
Hard
Which of Verde's actions is least likely to constitute a violation of the Standards?
Solution
B is correct. Buying commercially available satellite imagery, downloading the grid operator's published dispatch data, and interviewing rail suppliers are the ordinary diligence expected under Standard V(A) – Diligence and Reasonable Basis. None of these sources is an insider, and building an independent evidentiary record supports rather than undermines the recommendation, so this activity stands apart from Verde's other conduct.
The 3 June personal sale violates Standard VI(B) – Priority of Transactions: Verde liquidated her own position two days before her clients and employer saw a downgrade she had already written, and she did so without the preclearance CAA's policy requires for securities she covers. The marketing sheet violates Standard III(D) – Performance Presentation and Standard I(C) – Misrepresentation: the five-year record was earned at Andes Capital, and labeling it "Verde's Results" without naming the prior firm misleads Ridgeline about where and under what constraints the returns were generated. Retaining the supporting statements does not cure the missing attribution, and the footnote compounds the problem by implying the charter itself produces superior risk-adjusted results, contrary to Standard VII(B) – Reference to CFA Institute, the CFA Designation, and the CFA Program.
The 3 June personal sale violates Standard VI(B) – Priority of Transactions: Verde liquidated her own position two days before her clients and employer saw a downgrade she had already written, and she did so without the preclearance CAA's policy requires for securities she covers. The marketing sheet violates Standard III(D) – Performance Presentation and Standard I(C) – Misrepresentation: the five-year record was earned at Andes Capital, and labeling it "Verde's Results" without naming the prior firm misleads Ridgeline about where and under what constraints the returns were generated. Retaining the supporting statements does not cure the missing attribution, and the footnote compounds the problem by implying the charter itself produces superior risk-adjusted results, contrary to Standard VII(B) – Reference to CFA Institute, the CFA Designation, and the CFA Program.
