ESG-Investing by CFA Institute Actual Free Exam Questions And Answers

Question 1

Which issue was most similar in the governance challenges faced by Enron and WeWork?

A. Related-party deals

B. Auditor lapses

C. Dominance of the chief executive officer (CEO)

Discussion 0

Correct Answer: C Vote an answer

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Question 2

Which of the following statements regarding ESG considerations and sovereign debt is most accurate?

A. There is little correlation between ESG risk and credit ratings

B. ESG integration in sovereign debt is at similar levels to listed equities and corporate debt

C. ESG ratings tend to be structurally lower for emerging countries relative to developed economies

Discussion 0

Correct Answer: C Vote an answer

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Question 3

Which of the following statements is most accurate? Faith-based Islamic investors:

A. look to invest in line with Shariah principles.

B. may own investments that pay interest.

C. may invest in gambling companies.

Discussion 0

Correct Answer: A Vote an answer

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Question 4

A bond issued to finance construction of a solar farm is an example of a:

A. blue bond

B. transition bond

C. green bond

Discussion 0

Correct Answer: C Vote an answer

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Question 5

Which of the following statements about social trends is most accurate?

A. The importance of a social trend for a country is independent of the level of its economic development

B. The impact of a social trend on companies within the same sector may differ based on each company's culture

C. Social trends have similar impacts on different sectors

Discussion 0

Correct Answer: B Vote an answer

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Question 6

When an external auditor's performance materiality level is 60% of its overall materiality threshold, the auditor most likely:

A. Will apply tailored audit procedures for the smallest 40% of the company's segments

B. Has a low level of confidence in the company's financial controls

C. Uses a sample that covers 60% of the total number of the company's transactions during the financial year

Discussion 0

Correct Answer: B Vote an answer

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Question 7

The consulting firm McKinsey & Company includes transparency as part of which of the following dimensions of an asset manager's investment approach?

A. Tools and processes

B. Resources and organization

C. Public reporting

Discussion 0

Correct Answer: A Vote an answer

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Question 8

The LEAP assessment framework developed by the Taskforce on Nature-Related Financial Disclosure (TNFD) stands for:

A. listen, estimate, advocate, preserve.

B. learn, engage, adapt, protect.

C. locate, evaluate, assess, prepare.

Discussion 0

Correct Answer: C Vote an answer

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Question 9

To reflect weak governance of a private equity holding, an analyst's model should most likely include a reduction in the holding's:

A. Terminal value

B. Cost of capital

C. Bankruptcy risk

Discussion 0

Correct Answer: A Vote an answer

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Question 10

Which of the following is one of the five main drivers of nature change described by the Taskforce on Nature- related Financial Disclosures (TNFD)?

A. Ecosystem services

B. Invasive alien species

C. Transmission channels

Discussion 0

Correct Answer: B Vote an answer

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Question 11

Information provided by ESG rating agencies is most likely:

A. already reflected in stock prices.

B. relatively noisy.

C. subject to "group think."

Discussion 0

Correct Answer: B Vote an answer

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Question 12

A hurdle to adopting ESG investing is most likely a:

A. lack of options outside of equities.

B. lack of suitable benchmarks.

C. focus on short-term performance.

Discussion 0

Correct Answer: B Vote an answer

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Question 13

Engagement teams with a history of governance-led engagement are most likely to be organized:

A. by sector.

B. by asset class.

C. geographically.

Discussion 0

Correct Answer: A Vote an answer

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Question 14

According to the UK Investor Forum which of the following is a key success factor for effective engagement?

A. Transparency on conflicts of interest

B. Clear leadership with appropriate relationships, skills and knowledge

C. Regulatory approval of the collaboration

Discussion 0

Correct Answer: B Vote an answer

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Question 15

Under the "shades of green" methodology developed by the Center for International Climate Research (CICERO), a bond that funds transition activities that do not lock in emissions is considered:

A. Light green

B. Medium green

C. Yellow

Discussion 0

Correct Answer: A Vote an answer

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CFA Institute Certificate in ESG Investing - ESG-Investing Exam Practice Test

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