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Free CFA — Chartered Financial Analyst Exam Questions and Answers
Last updated: February 19, 2025
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CFA — Chartered Financial Analyst
#Question
If an investor uses technical analysis, what is their primary goal?
A.
Time market entry
B.
Measure company performance
C.
Determine intrinsic value
D.
Understand economic trends
Correct Answer:
A
Technical analysis focuses on price movements and trends to help investors time their market entries or exits rather than assessing a company's intrinsic value.
#Question
A company is considering entering a new market but faces substantial entry costs. What should they analyze first?
A.
Revenue projections
B.
Market size
C.
Recommended channels
D.
Potential competition
Correct Answer:
D
Analyzing potential competition is crucial for understanding market dynamics and making informed decisions about profitability and market entry feasibility.
#Question
If an investor utilizes futures contracts, what are they predominantly trying to manage?
A.
Cash flow
B.
Interest rate risk
C.
Operational risk
D.
Price fluctuations
Correct Answer:
D
Futures contracts are often used to hedge against price fluctuations in various assets, providing a form of risk management in volatile markets.
#Question
In terms of market trends, what does a 'bear market' refer to?
A.
Rising prices
B.
Declining prices
C.
Stable prices
D.
Unpredictable prices
Correct Answer:
B
A bear market is characterized by declining prices, typically by 20% or more, reflecting overall pessimism in the market.
#Question
Should an investor's holding period change based on market conditions, what does this indicate about their strategy?
A.
Long-term focus
B.
Speculation
C.
Directional bias
D.
Flexibility
Correct Answer:
D
The need to adjust holding periods based on market conditions often signals flexibility in investment strategy, adapting to maximize returns or minimize risks.
#Question
A stock with a high dividend yield compared to its peers may suggest what?
A.
It is undervalued
B.
Strong growth
C.
Inefficiency
D.
It is overvalued
Correct Answer:
A
A high dividend yield relative to peers may suggest that the stock is undervalued, reflecting higher returns through dividends relative to its share price.
#Question
If an investor re-evaluates the risk of their investment portfolio due to changing market conditions, what is this process called?
A.
Asset allocation
B.
Financial forecasting
C.
Stress testing
D.
Risk management
Correct Answer:
D
Re-evaluating risk amidst changing market conditions is part of effective risk management, ensuring investment strategies remain aligned with current realities.
CFA — Chartered Financial Analyst
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