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CFA® Level I Question of the Day

CFA® Level I Question of the Day

Kaplan Schweser's CFA® Question of the Day begins in October 2016 and runs through Exam Day. Below you will find the answers for our Level I Question of the Day emails.

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February 24

By Kaplan Schweser | Posted on February 24, 2017


Answer to Level I Question A

Answer Explanation: Parks does not violate Standard IV(A) by acting on his employer's recommendation.

Choices "b" and "c" are incorrect.  Parks violates both Standard III(A) - Loyalty, Prudence, and Care and Standard III(C) - Suitability by not considering his clients which are the Illusion Inc. employees.  Parks should have done further analysis of the company to determine if it was suitable to the risk and return objective set forth in the investment…

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February 23

By Kaplan Schweser | Posted on February 23, 2017


Answer to Level I Question C

Answer Explanation: Five shares do not constitute material or significant ownership and would not be likely to impair Charles' independence and objectivity.  The holding does not need to be disclosed.

Choice "a" is incorrect.  A parent does have beneficial ownership of a child's stock.

Choice "b" is incorrect.  Charles would need to disclose beneficial ownership of stock held in a trust, if it were a material holding.

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February 22

By Kaplan Schweser | Posted on February 22, 2017


Answer to Level I Question A

Answer Explanation: Phillips has not dealt fairly with her client because she used her special knowledge to engage in front-running.

Choice "b" is incorrect.  Phillips violated the standards by front-running.  It does not matter if the firm was helped or harmed.

Choice "c" is incorrect.  The violation at issue is failure to deal fairly with the client, not failure to disclose transactions.

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February 21

By Kaplan Schweser | Posted on February 21, 2017


Answer to Level I Question A

Answer Explanation: Fair treatment of clients requires that all clients for whom an investment is suitable or who have expressed an interest be given the information as simultaneously as possible.

Choice "b" is incorrect.  It is unfair to favor any clients for whom the investment might be suitable in disseminating information.

Choice "c" is incorrect.  Disseminating the recommendation at the discretion of the institutional sales force might…

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February 20

By Kaplan Schweser | Posted on February 20, 2017


Answer to Level I Question B

Answer Explanation: Under the Standards, Miller retains supervisory responsibility for all subordinates despite her delegation of some duties.

Choice "a" is incorrect.  Members with supervisory responsibility must exercise their responsibility with respect to all subordinates; whether or not they are subject to the Standards.

Choice "c" is incorrect.  The ultimate responsibility lies with Miller, even if she delegates the supervisory authority to her…

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February 19

By Kaplan Schweser | Posted on February 19, 2017


Answer to Level I Question B

Answer Explanation: Opinions can be stated in a research report, provided they are clearly distinguished from facts.

Choice "a" is incorrect.  The report should be reviewed by a supervisory analyst or committee, but the Standards do not require that two supervisory analysts review the research report.

Choice "c" is incorrect.  The report should include the basic characteristics of the investment and need not include detailed accounting adjustments…

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February 18

By Kaplan Schweser | Posted on February 18, 2017


Answer to Level I Question C

Answer Explanation: Standard V(B) requires members to conduct a thorough review prior to presenting an investment analysis.  Members may emphasize information they determine could be important in reaching an investment decision and may eliminate unimportant information altogether.  Analysts should not omit important matters, whether or not they would seem obvious to a trained stockbroker.

Choice "a" is incorrect.  Members must include information that…

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February 17

By Kaplan Schweser | Posted on February 17, 2017


Answer to Level I Question C

Answer Explanation: Members must comply with the most strict laws, regulations, codes, and standards to which he or she is subject, including home country, country he or she is operating in, and the Code and Standards.

Choice "a" is incorrect.  If the local laws are stricter than the Standards, then the member must comply with the local laws.

Choice "b" is incorrect.  If the local laws are less strict than the Standards, then the member must comply…

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February 16

By Kaplan Schweser | Posted on February 16, 2017


Answer to Level I Question A

Answer Explanation: The Code of Ethics requires members to practice in a professional and ethical manner so as to credit themselves and the profession.

Choice "b" is incorrect.  Adding value is not specifically covered by the Code of Ethics.

Choice "c" is incorrect.  There is no direct mention regarding the reputation of CFA Institute.

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February 15

By Kaplan Schweser | Posted on February 15, 2017


Answer to Level I Question: B

Answer Explanation: Tracking error is calculated by subtracting the benchmark return from the total gross return of the portfolio.  A negative tracking error means the portfolio's gross return is less than the benchmark return.  Factoring in fees, which is not how tracking error is defined, will increase the differential between the portfolio return and the benchmark return (and consequently the size of the negative error).

Choice "a" is incorrect. …

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February 14

By Kaplan Schweser | Posted on February 14, 2017


Answer to Level I Question: C

Answer Explanation: Tracking error is calculated by subtracting the benchmark return from the total gross return.  The gross return is 6.0% for the portfolio (5.8% + 0.2%).  If the tracking error is 0.9%, the benchmark return must be 5.1%.

Choice "a" is incorrect.  This choice incorrectly subtracts the total gross return from the benchmark return, rather than subtracting the benchmark return from the total gross return.  However, 6.9% would be correct…

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February 13

By Kaplan Schweser | Posted on February 13, 2017


Answer to Level I Question: B

Answer Explanation: Tracking error is the deviance from a benchmark return stated in units of return.  Thus, a manager with expected value of 63 bp would average a 0.63 percent deviance from the benchmark return.

Choice "a" is incorrect.  Tracking risk is the standard deviation of misses from a benchmark return rather than the percentage return miss.

NOTE: Some practitioners use tracking risk and tracking error interchangeably but the two terms are…

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February 12

By Kaplan Schweser | Posted on February 12, 2017 | Read Article


February 11

By Kaplan Schweser | Posted on February 11, 2017 | Read Article


February 10

By Kaplan Schweser | Posted on February 10, 2017 | Read Article


February 9

By Kaplan Schweser | Posted on February 09, 2017 | Read Article


February 8

By Kaplan Schweser | Posted on February 08, 2017 | Read Article


February 7

By Kaplan Schweser | Posted on February 07, 2017 | Read Article


February 6

By Kaplan Schweser | Posted on February 06, 2017 | Read Article


February 5

By Kaplan Schweser | Posted on February 05, 2017 | Read Article


February 4

By Kaplan Schweser | Posted on February 04, 2017 | Read Article


February 3

By Kaplan Schweser | Posted on February 03, 2017 | Read Article


February 2

By Kaplan Schweser | Posted on February 02, 2017 | Read Article


February 1

By Kaplan Schweser | Posted on February 01, 2017 | Read Article


January 31

By Kaplan Schweser | Posted on January 31, 2017 | Read Article


January 30

By Kaplan Schweser | Posted on January 30, 2017 | Read Article


January 29

By Kaplan Schweser | Posted on January 29, 2017 | Read Article


January 28

By Kaplan Schweser | Posted on January 28, 2017 | Read Article


January 27

By Kaplan Schweser | Posted on January 27, 2017 | Read Article


January 26

By Kaplan Schweser | Posted on January 26, 2017 | Read Article


January 25

By Kaplan Schweser | Posted on January 25, 2017 | Read Article


January 24

By Kaplan Schweser | Posted on January 24, 2017 | Read Article


January 23

By Kaplan Schweser | Posted on January 23, 2017 | Read Article


January 22

By Kaplan Schweser | Posted on January 22, 2017 | Read Article


January 21

By Kaplan Schweser | Posted on January 21, 2017 | Read Article


January 20

By Kaplan Schweser | Posted on January 20, 2017 | Read Article


January 19

By Kaplan Schweser | Posted on January 19, 2017 | Read Article


January 18

By Kaplan Schweser | Posted on January 18, 2017 | Read Article


January 17

By Kaplan Schweser | Posted on January 17, 2017 | Read Article


January 16

By Kaplan Schweser | Posted on January 16, 2017 | Read Article


January 15

By Kaplan Schweser | Posted on January 15, 2017 | Read Article


January 14

By Kaplan Schweser | Posted on January 14, 2017 | Read Article


January 13

By Kaplan Schweser | Posted on January 13, 2017 | Read Article


January 12

By Kaplan Schweser | Posted on January 12, 2017 | Read Article


January 11

By Kaplan Schweser | Posted on January 11, 2017 | Read Article


January 10

By Kaplan Schweser | Posted on January 10, 2017 | Read Article


January 9

By Kaplan Schweser | Posted on January 09, 2017 | Read Article


January 8

By Kaplan Schweser | Posted on January 08, 2017 | Read Article


January 7

By Kaplan Schweser | Posted on January 07, 2017 | Read Article


January 6

By Kaplan Schweser | Posted on January 06, 2017 | Read Article


January 5

By Kaplan Schweser | Posted on January 05, 2017 | Read Article


January 4

By Kaplan Schweser | Posted on January 04, 2017 | Read Article


January 3

By Kaplan Schweser | Posted on January 03, 2017 | Read Article


January 2

By Kaplan Schweser | Posted on January 02, 2017 | Read Article


January 1

By Kaplan Schweser | Posted on January 01, 2017 | Read Article


December 31

By Kaplan Schweser | Posted on December 31, 2016 | Read Article


December 30

By Kaplan Schweser | Posted on December 30, 2016 | Read Article


December 29

By Kaplan Schweser | Posted on December 29, 2016 | Read Article


December 28

By Kaplan Schweser | Posted on December 28, 2016 | Read Article


December 27

By Kaplan Schweser | Posted on December 27, 2016 | Read Article


December 26

By Kaplan Schweser | Posted on December 26, 2016 | Read Article


December 25

By Kaplan Schweser | Posted on December 25, 2016 | Read Article


December 24

By Kaplan Schweser | Posted on December 24, 2016 | Read Article


December 23

By Kaplan Schweser | Posted on December 23, 2016 | Read Article


December 22

By Kaplan Schweser | Posted on December 22, 2016 | Read Article


December 21

By Kaplan Schweser | Posted on December 21, 2016 | Read Article


December 20

By Kaplan Schweser | Posted on December 20, 2016 | Read Article


December 19

By Kaplan Schweser | Posted on December 19, 2016 | Read Article


December 18

By Kaplan Schweser | Posted on December 18, 2016 | Read Article


December 17

By Kaplan Schweser | Posted on December 17, 2016 | Read Article


December 16

By Kaplan Schweser | Posted on December 16, 2016 | Read Article


December 15

By Kaplan Schweser | Posted on December 15, 2016 | Read Article


December 14

By Kaplan Schweser | Posted on December 14, 2016 | Read Article


December 13

By Kaplan Schweser | Posted on December 13, 2016 | Read Article


December 12

By Kaplan Schweser | Posted on December 12, 2016 | Read Article


December 11

By Kaplan Schweser | Posted on December 11, 2016 | Read Article


December 10

By Kaplan Schweser | Posted on December 10, 2016 | Read Article


December 9

By Kaplan Schweser | Posted on December 09, 2016 | Read Article


December 8

By Kaplan Schweser | Posted on December 08, 2016 | Read Article


December 7

By Kaplan Schweser | Posted on December 07, 2016 | Read Article


December 6

By Kaplan Schweser | Posted on December 06, 2016 | Read Article


December 5

By Kaplan Schweser | Posted on December 05, 2016 | Read Article


December 4

By Kaplan Schweser | Posted on December 04, 2016 | Read Article


December 3

By Kaplan Schweser | Posted on December 03, 2016 | Read Article


December 2

By Kaplan Schweser | Posted on December 02, 2016 | Read Article


December 1

By Kaplan Schweser | Posted on December 01, 2016 | Read Article


November 30

By Kaplan Schweser | Posted on November 30, 2016 | Read Article


November 29

By Kaplan Schweser | Posted on November 29, 2016 | Read Article


November 28

By Kaplan Schweser | Posted on November 28, 2016 | Read Article


November 27

By Kaplan Schweser | Posted on November 27, 2016 | Read Article


November 26

By Kaplan Schweser | Posted on November 26, 2016 | Read Article


November 25

By Kaplan Schweser | Posted on November 25, 2016 | Read Article


November 24

By Kaplan Schweser | Posted on November 24, 2016 | Read Article


November 23

By Kaplan Schweser | Posted on November 23, 2016 | Read Article


November 22

By Kaplan Schweser | Posted on November 22, 2016 | Read Article


November 21

By Kaplan Schweser | Posted on November 21, 2016 | Read Article


November 20

By Kaplan Schweser | Posted on November 20, 2016 | Read Article


November 19

By Kaplan Schweser | Posted on November 19, 2016 | Read Article


November 18

By Kaplan Schweser | Posted on November 18, 2016 | Read Article


November 17

By Kaplan Schweser | Posted on November 17, 2016 | Read Article


November 16

By Kaplan Schweser | Posted on November 16, 2016 | Read Article


November 15

By Kaplan Schweser | Posted on November 15, 2016 | Read Article


November 14

By Kaplan Schweser | Posted on November 14, 2016 | Read Article


November 13

By Kaplan Schweser | Posted on November 13, 2016 | Read Article


November 12

By Kaplan Schweser | Posted on November 12, 2016 | Read Article


November 11

By Kaplan Schweser | Posted on November 11, 2016 | Read Article


November 10

By Kaplan Schweser | Posted on November 10, 2016 | Read Article


November 9

By Kaplan Schweser | Posted on November 09, 2016 | Read Article


November 8

By Kaplan Schweser | Posted on November 08, 2016 | Read Article


November 7

By Kaplan Schweser | Posted on November 07, 2016 | Read Article


November 6

By Kaplan Schweser | Posted on November 06, 2016 | Read Article


November 5

By Kaplan Schweser | Posted on November 05, 2016 | Read Article