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

Question 1

Which of the following strategies is most consistent with an investment mandate focusing on risk management?

A. Monitoring company managers

B. Tilt the portfolio towards desired ESG factors

C. Exclude certain companies with respect to ESG factors

Discussion 0

Correct Answer: C Vote an answer

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Question 2

According to a study of the Hermes UK Focus Fund: which of the following engagement objectives was most likely to be achieved through shareholder activism?

A. Restructuring and financial policies

B. Improvements to investor relations

C. Renumeration policy changes

Discussion 0

Correct Answer: A Vote an answer

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Question 3

Which of the following is best classified as a primary ESG data source?

A. Research from investment consultants

B. Regulator scores

C. ESG ratings

Discussion 0

Correct Answer: C Vote an answer

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Question 4

Active ownership most likely:

A. Emphasizes negative screening.

B. Prioritizes disinvestment activities.

C. Uses a proxy voting strategy driven by a clear agenda.

Discussion 0

Correct Answer: C Vote an answer

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Question 5

Which of the following statements regarding engagement is most accurate? Engagement:

A. Helps companies understand the expectations of their investors.

B. Yields great benefits when companies show little desire for productive dialogue with investors.

C. Is more likely to be effective in response to a share price fall than long-standing messaging.

Discussion 0

Correct Answer: A Vote an answer

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Question 6

Environmental analysis will potentially determine adjustments to:

A. Valuation multiples only.

B. Financial forecasts only.

C. Both financial forecasts and valuation multiples.

Discussion 0

Correct Answer: C Vote an answer

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Question 7

Which of the following best describes a challenge of ESG integration into investment processes?

A. Cultural challenges and biases within investment management firms

B. Standardized disclosures in audited financial statements that hinder differentiated analysis

C. Overly detailed company-level ESG reporting that overwhelms investors

Discussion 0

Correct Answer: A Vote an answer

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Question 8

Which of the following best describes a challenge of ESG integration?

A. Disagreements between investors and company management teams about materiality thresholds

B. Overly detailed company-level ESG reporting that overwhelms investors

C. The reliance solely on algorithms to forecast future ESG performance

Discussion 0

Correct Answer: A Vote an answer

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Question 9

An investor requires a social return and will tolerate a sub-market financial return. This best characterizes:

A. sustainable and responsible investing.

B. social investing.

C. impact investing.

Discussion 0

Correct Answer: C Vote an answer

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Question 10

Which of the following statements about proxy voting is most accurate? The majority of asset owners:

A. retain direct control of voting

B. delegate voting rights to fund managers so long as those managers reflect the asset owner's voting policies

C. leave voting decisions to their fund managers after having assessed the alignment between the fund manager's voting policies and their own

Discussion 0

Correct Answer: C Vote an answer

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Question 11

Which of the following best describes a fund manager's actions regarding specific assets to preserve or enhance their value?

A. Engagement

B. Monitoring

C. Corporate sustainability

Discussion 0

Correct Answer: A Vote an answer

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Question 12

Which of the following is most likely associated with positive screening?

A. Thematic investing

B. Best-in-class investing

C. Green investing

Discussion 0

Correct Answer: B Vote an answer

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Question 13

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 14

A potential challenge for an asset owner implementing responsible investment is:

A. Consultants assessing too many products with ESG characteristics

B. The inability of the asset owner to influence the way fund managers interpret fiduciary duty

C. A lack of suitable indices

Discussion 0

Correct Answer: B Vote an answer

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CFA Institute Sustainable Investing Certificate (CFA-SIC) - Sustainable-Investing Exam Practice Test

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