Free tool · Diagnostic Quiz

CFA Level I Diagnostic Quiz

Five questions across five examinable topics. Answer honestly — the point is to find out where your thinking breaks down, not to guess your way to a score.

Q1Ethics & Professional Standards

A portfolio manager learns that a client is about to place a large buy order. Before executing the client order, she purchases the same security for her own account. This most likely violates which Standard?

AStandard I(A) — Knowledge of the LawBStandard III(A) — Loyalty, Prudence and CareCStandard VI(B) — Priority of TransactionsDStandard II(A) — Material Non-public Information

Q2Fixed Income

A bond with a modified duration of 5.0 and a convexity of 60 experiences a 100 bps increase in yield. The approximate percentage price change is closest to:

A−5.0%B−4.7%C−5.3%D−5.5%

Q3Financial Statement Analysis

Under IFRS, a company capitalises development costs once technical feasibility is established. Under US GAAP, development costs are:

ACapitalised if future economic benefits are probableBAlways expensed as incurredCCapitalised only for software developmentDExpensed until commercial viability is established, then capitalised

Q4Equity Investments

The Gordon Growth Model (GGM) is LEAST appropriate for valuing companies that:

AHave stable, predictable dividend policiesBAre in mature industries with slow, steady growthCHave growth rates that exceed the required rate of returnDPay dividends consistently over time

Q5Derivatives

A European call option is currently at-the-money. Which of the following changes will increase the option's value, all else equal?

AA decrease in the underlying asset's priceBA decrease in time to expirationCAn increase in the risk-free rateDAn increase in dividends paid by the underlying asset